___**Steel DA Aff

UQ China Econ 2ac

Chinese economic collapse is inevitable its impossible to meet future energy demand

Heinberg, 10 fellow at the Post Carbon Institute, fellow at the Committee on International Trade and advisor to the European Parliament,
National Petroleum Council, and the U.S. Secretary of Energy, (Richard, China's Coal Bubble...and how it will deflate U.S. efforts to develop "clean coal, Post Carbon Institute, May 4, 2010, http://www.postcarbon.org/article/96251-china-s-coal-bubble-and-how-it-will)//JK

China: Leading the Global EconomyInto the Ditch Some commentators are concerned about China's economy for reasons that have nothing to do with coal. The prime example: it would appear that Beijing has a problem with over-reliance on property development as an engine of domestic economic growth. One of those sounding the alarm on this score is hedge fund manager James Chanos, founder of Kynikos
Associates Ltd.; he says China is "on a treadmill to hell," and that the nation is "Dubai times a thousand." He has also been quoted as saying, "They can't a afford to get off this heroin of property development. It is the only thing keeping the economic . . . numbers growing." A bursting of China's property bubble could collapse the nation's economy quickly and soon. But it is essentially a problem of money, and money is a creation of the human mind. Currencies can be reformed; banking systems can be reorganized. Such things are painful and take time, but they are certainly possibleand historic examples are n numerous. Energy is different. Without energy, nothing happens. Transport systems stall; building

construction and manufacturing cease. The lights go out. You can't make energy out of nothing and you can't call it into
existence with computer keystrokes, as bankers can do with money. Generating electrical power requires physical resources, infrastructure, and labor. And s so there are natural limits to how much energy we can summon for our human purposes at any given time. China has become a great

manufacturing powerhouse largely because it was able to grow its energy supply quickly and cheaply. And so China's contribution to the world economy is to this extent a function of China's contribution to world energy. One significant gauge of
this link is the fact that Chinese coal production represents more than double the amount of energy contributed to the world economy as compared to Saudi A Arabia's oil production (1,100 million tons of oil equivalent vs. 540 Mtoe.) If China faces hard energy limits, that means its

economy is living on borrowed time. That also means the world as a whole confronts energy and economic constraints that are
harsher, and closer, than we are being told.

UQ China Econ 1ar

Chinese collapse inevitable in 2012economic unsustainability and social discontent. Chang 11 The Coming Collapse of China: 2012 Edition BY GORDON G. CHANG (graduate of Cornell University Law Degree| DECEMBER 29, 2011
http://www.foreignpolicy.com/articles/2011/12/29/the_coming_collapse_of_china_2012_edition In the middle of 2001, I predicted in my book, The Coming Collapse of China, that the Communist Party would fall from power in a decade, in large measure because of the changes that accession to the World Trade Organization (WTO) would cause. A decade has passed; the Communist Party is still in power. But don't think I'm taking my prediction back. Why has China as we know it survived? First and foremost, the Chinese central government has managed to avoid adhering to many of its obligations made when it joined the WTO in 2001 to open its economy and play by the rules, and the international community maintained a generally tolerant attitude toward this noncompliant behavior. As a result, Beijing has been able to protect much of its home market from foreign competitors while ramping up exports. By any measure, China has been phenomenally successful in developing its economy after WTO accession -- returning to the almost double-digit growth it had enjoyed before the near-recession suffered at the end of the 1990s. Many analysts assume this growth streak can continue indefinitely. For instance, Justin Yifu Lin, the World Bank's chief economist, believes the country can grow for at least two more decades at 8 percent, and the International Monetary Fund predicts China's economy will surpass America's in size by 2016. Don't believe any of this. China outperformed other countries because it was in a three-decade upward supercycle, principally for three reasons. First, there were Deng Xiaoping's transformational "reform and opening up" policies, first implemented in the late 1970s. Second, Deng's era of change coincided with the end of the Cold War, which brought about the elimination of political barriers to international commerce. Third, all of this took place while China was benefiting from its "demographic dividend," an extraordinary bulge in the workforce. Yet China's "sweet spot" is over because, in recent years, the

conditions that created it either disappeared or will soon. First, the Communist Party has turned its back on Deng's progressive policies. Hu Jintao, the current leader, is presiding over an era marked by, on balance, the reversal of
reform. There has been, especially since 2008, a partial renationalization of the economy and a marked narrowing of opportunities for foreign business. For example, Beijing blocked acquisitions by foreigners, erected new barriers like the "indigenous innovation" rules, and harassed market-leading companies like Google. Strengthening "national champion" state enterprises at the expense of others, Hu has abandoned the economic paradigm that made his country successful. Second, the global boom of the last two decades ended in 2008 when markets around the world crashed. The tumultuous events of that year brought to a close an unusually benign period during which countries attempted to integrate China into the international system and therefore tolerated its mercantilist policies. Now, however, every nation wants to export more and, in an era of protectionism or of managed trade, China will not be able to export its way to prosperity like it did during the Asian financial

crisis in the late 1990s. China is more dependent on international commerce than almost any other nation, so trade friction -- or even declining global demand -- will hurt it more than others. The country, for instance, could be the biggest victim of the eurozone crisis. Third, China, which during its reform era had one of the best demographic profiles of any nation, will soon have one of the worst. The Chinese workforce will level off in about 2013,
perhaps 2014, according to both Chinese and foreign demographers, but the effect is already being felt as wages rise, a trend that will eventually make the country's factories uncompetitive. China, strangely enough, is running out of people to move to cities, work in

factories, and power its economy. Demography may not be destiny, but it will now create high barriers for growth. At the same time that China's economy no longer benefits from these three favorable conditions, it must recover from the dislocations -- asset bubbles and inflation -- caused by Beijing's excessive pump priming in 2008 and 2009, the biggest
economic stimulus program in world history (including $1 trillion-plus in 2009 alone). Since late September, economic indicators -- electricity consumption, industrial orders, export growth, car sales, property prices, you name it -- are pointing toward either a flat lining or contracting economy. Money started to leave the country in October, and Beijing's foreign reserves have been shrinking since September. As a result, we will witness

either a crash or, more probably, a Japanese-style multi-decade decline. Either way, economic troubles are occurring just as Chinese society is becoming extremely restless. It is not only that protests have spiked upwards -- there were 280,000 "mass incidents" last year according to one count -- but that they are also increasingly violent as the recent wave of uprisings, insurrections, rampages and bombings suggest. The Communist Party, unable to mediate social discontent, has chosen to step-up repression to levels not seen in two decades. The authorities have,
for instance, blanketed the country's cities and villages with police and armed troops and stepped up monitoring of virtually all forms of communication and the media. It's no wonder that, in online surveys, "control" and "restrict" were voted the country's most popular words for 2011. That tough approach has kept the regime secure up to now, but the stability it creates can only be short-term in China's increasingly modernized society, where most people appear to believe a one-party state is no longer appropriate. The regime has clearly lost the battle of ideas. Today, social change in China is

accelerating. The problem for the country's ruling party is that, although Chinese people generally do not have revolutionary intentions, their acts of
social disruption can have revolutionary implications because they are occurring at an extraordinarily sensitive time. In short, China is much too dynamic and volatile for the Communist Party's leaders to hang on. In some location next year, whether a small village or great city, an

incident will get out of control and spread fast. Because people across the country share the same thoughts, we should not be surprised they will act in the same way. We have already seen the Chinese people act in
unison: In June 1989, well before the advent of social media, there were protests in roughly 370 cities across China, without national ringleaders. This phenomenon, which has swept North Africa and the Middle East this year, tells us that the nature of political change around the

world is itself changing, destabilizing even the most secure-looking authoritarian governments. China is by no means immune to this wave of popular uprising, as Beijing's overreaction to the so-called "Jasmine"
protests this spring indicates. The Communist Party, once the beneficiary of global trends, is now the victim of them. So will China collapse? Weak governments can remain in place a long time. Political scientists, who like to bring order to the inexplicable, say that a host of factors are required for regime collapse and that China is missing the two most important of them: a divided government and a strong opposition. At a time when crucial challenges mount, the Communist Party is beginning a multi-year political transition and therefore ill-

prepared for the problems it faces. There are already visible splits among Party elites, and the leadership's sluggish response in recent
months -- in marked contrast to its lightning-fast reaction in 2008 to economic troubles abroad -- indicates that the decision-making process in Beijing is deteriorating. So check the box on divided government. And as for the existence of an opposition, the Soviet Union fell without much of one. In our

substantially more volatile age, the Chinese government could dissolve like the autocracies in Tunisia and Egypt. As evident in this month's "open revolt" in the village of Wukan in Guangdong province, people can organize themselves quickly -- as they have so many times since the end of the 1980s. In any event, a well-oiled machine is no longer needed to bring down a regime in this age of leaderless revolution. Not long ago, everything was going well for the mandarins in Beijing. Now, nothing is. So, yes, my prediction was wrong. Instead of 2011, the mighty Communist Party of China

will fall in 2012. Bet on it.

UQ China Steel
China Steel weak now- slowed growth, profit decline, and export slump prove China Daily 6-23 [China Daily, 6-23-12, China crude steel sector grows slower, http://www.chinadaily.com.cn/business/2012-06/23/content_15519267.htm, accessed 6/24] BEIJING - Growth of China's crude steel output slowed in the first five months, as demand dropped amid a cooling domestic economy, according to data from the country's top economic planner. Crude steel output increased by 2.2
percent year-on-year to 296.26 million tons during the January-May period, down from 8.5-percent growth recorded during the same period last year, data with the National Development and Research Commission showed. In May, crude steel output rose 2.5 percent from a year earlier, 5.3 percentage points lower than last year. Aside from output, the sector's profits also slipped sharply. Steel producers saw profits

down 49.5 percent from a year earlier to 39.5 billion yuan ($6.27 billion) in the first four months. In breakdown, profits of ferrous metals mining and dressing companies dropped 7.9 percent, while steel smelting and processing companies saw profits down 68.8 percent. Steel price also fell in May, as
the country's average steel composite price index retreated 17.28 points from last year to 118.76. The figure was also 2.76 points lower than the previous month. China's manufacturing sector has been hard hit, after the country introduced measures to

cool its property market, a major steel user, and exports slumped amid a lingering eurozone crisis. Chinese steel economy failing nowdemand and prices plummeting. Chovanec 1/16/2012How China Could Easily Have A Hard Landing With Any Slowdown In Construction Growth Patrick Chovanec (Associate
Professor of Practice at Tsinghua Universitys School of Economics and Management in Beijing, China.) January 16, 2012 http://articles.businessinsider.com/2012-01-16/markets/30631008_1_real-estate-hard-landing-gdp/3 There are two ways that the drop in the property market translates into slower economic growth: direct and indirect. The direct impact is fairly obvious: to the extent that Chinas real estate developers are overextended, and preoccupied with selling off their existing inventory in order to stave off bankruptcy, they wont be commissioning any new projects maybe not for quite a while. That means no work for construction companies, which in turn wont be buying any new construction equipment. It also means less demand for steel

(construction reportedly accounts for 40% of Chinas steel demand), cement, glass, copper pipes and wiring, etc. It
also means less furniture and fewer appliances to fill those new homes (although, as we know, many Chinese investors already leave the units they buy empty anyway). The estimates Ive seen say these sectors dependent on property construction account for between 20% and

25% of Chinas total GDP. Frankly, you dont need a real estate collapse in order to trigger a serious slowdown in these sectors. All you need is a pause in the hitherto frantic pace of construction. Lets assume the bull argument that, due to
urbanization and rising incomes, speculators are right: all the units theyre snapping up today, and holding as investments, will ultimately be filled with end users. That still assumes a catch-up period. If real estate investment, which according to monthly official figures has (even into November) been growing at >30% year-on-year, keeps outpacing urbanization and rising incomes, the gap will never close. At some point, the pace of construction has to moderate to give all that anticipated end user demand a chance to materialize, and start filling all those vacancies. If demand isnt what speculators imagine it to be, at todays sky-high prices, the adjustment and resulting slowdown will be even more severe. So what evidence do we have that a construction slowdown may be occurring? Official data on housing starts does exist, but its not a reliable metric. Developers stand to lose their land back to the government if they dont do anything with it after a few years. They are also under considerable pressure to show progress on social housing mandates that may be a condition of obtaining land. For both reasons, developers will often dig a hole in the ground and call it a start, even if they intend to delay further work indefinitely. Last month, Chinas Ministry of Housing and Urban-Rural Development (MOHURD) estimated that as much as 1/3 of reported social housing starts were just digging a hole rather than actually building apartments. A better approach is to look at the market for construction inputs. The clearest picture we have is for steel. According to a friend of mine who is an analyst in the steel and commodities sector, and recently completed a countrywide tour of talking to producers, sentiment in Chinas steel industry is as gloomy as he has ever seen it. n November, Chinese steel

output was down -8.8% month-on-month, down for the sixth month in row. More importantly, it was down -0.6% year-onyear, indicating this was more than just a seasonal or partial fall-off from the all-time highs it hit in the first half of 2011, which were driven in large part by demand for cheap rebar for construction. Apparently, the demand that drove that boom has almost entirely disappeared. Interestingly, according to one report by Shanghai Security News, steelmakers say that actual sales in 2011 failed to
match official social housing construction data. Figures released by the China Iron and Steel Association last week indicate that steel output continued falling in December, by 3.87% month-on-month. Not surprisingly, two things have happened. First, domestic iron ore prices have

plummeted as unused stockpiles have accumulated. The China Iron and Steel Association recently announced that its iron
ore price index has fallen 22% in the past four months, since the beginning of September, while iron ore inventories at Chinese ports rose to 96.8 million tons by the end of 2011, up 32% from the year before (Chinese iron ore imports were still up 10% y-on-y in December, but analysts expect buying to slow in coming months, due to flagging demand). Second, Chinese steelmakers are suffering. According to Caijing, more than 1/3 of them experienced losses in October and November, and the industry excluding investment gains.

as a whole saw a net loss of RMB 920 million (US$ 146 million)

Overheat Turn 2ac**

Chinese economic growth fuels overheating. OGrady 11 China's overheating economy stokes fears for global inflation BY SEAN O'GRADY , ECONOMICS EDITOR FRIDAY 21 JANUARY 2011
http://www.independent.co.uk/news/business/news/chinas-overheating-economy-stokes-fears-for-global-inflation-2190283.html Fears of overheating and escalating inflation in the Chinese economy sent equity and commodity markets around the world tumbling yesterday, as the country returned to double digit growth rates. Some 1trillion in loans by local banks helped the Chinese economy to record

growth of more than 10 per cent last year, though escalating inflationary trends have raised fears about the sustainability of such expansion in her overheating economy. The Chinese National Bureau of Statistics said the economy
of the People's Republic expanded by 10.3 per cent in 2010, compared with about 1.7 per cent in the UK and 2.5 per cent in the US. It means China has returned to double-digit growth, having fallen back during the world recession to 9.2 per cent in 2009 and 9.6 per cent in 2008. China has averaged growth of around 10 per cent for the past 20 years, leaving it on some measures as the world's second-largest economy behind the US, having overtaken Japan and Germany this decade. The world's "two-speed" recovery continues. Apart from the export-driven boom that has seen China

accumulate more than $2trn in reserves, recent attempts by the Beijing government have been targeted at boosting domestic consumption, and it has actively encouraged the many state-controlled banks at a national and regional level to lend extraordinary
sums. According to the statistics bureau, Chinese banks loaned 7.95trn yuan (755bn) last year, with another 3trn or so of yuan loans made "off balance sheet", according to estimates produced by the credit ratings agency Fitch. While some of this has fuelled rising consumption among the emerging middle classes and contributed to the rising price of food globally much seems to have gone into a real estate bubble that many analysts fear

will burst before long, with unknowable consequences for China and the world economy. Other funds may have gone into "prestige" infrastructure projects that yield little or no financial or economic returns.
China's investment rate of 70 per cent of GDP is high even by developing economy standards, and three or four times the proportions usually encountered in the West. The Government has set a target for borrowing of 7.5trn yuan in 2011, which will trim growth in money supply which is now running at 50 per cent. Retail price inflation eased slightly in December, but the pressure of rising commodity prices in large part stimulated by China's breakneck growth seems certain to push it higher. Inflation stood at 4.6 per cent in December, after cresting a two-year high of 5.1 per cent in November. On average, inflation ran at 3.3 per cent over 2010, but it is expected to rise this year. Moreover, much inflationary pressure may be disguised in an

economy where national and regional officials still have the authority to intervene in markets and distort price signals. The authorities in Beijing may be even more concerned by the real estate bubble that has seen property prices in her
sprawling eastern metropolises rise by annual rates of 30, 40 or 50 per cent in recent years. A property crash would not only harm those Chinese who have invested in property but also the banks that lent into that boom, though the residential mortgage market is less developed than in the West. More generalised concerns about the prospects for China saw stock markets around the world take a hit yesterday. Commodity prices also

softened. He Yifeng, an analyst at Hongyuan Securities in Beijing, said: "Overheating signs have already emerged in the Chinese economy. The government may have to take measures to cool off economic activity soon."
Against a background of "currency wars", the Chinese press hailed this week's meeting of presidents Barack Obama and Hu Jintao as "successful".

That triggers both 1nc impacts a. Overheating leads to Chinese economic collapse. Chovanec 1/16/2012How China Could Easily Have A Hard Landing With Any Slowdown In Construction Growth Patrick Chovanec (Associate
Professor of Practice at Tsinghua Universitys School of Economics and Management in Beijing, China.) January 16, 2012 http://articles.businessinsider.com/2012-01-16/markets/30631008_1_real-estate-hard-landing-gdp/3 The magazine said industry executives foresee an even tougher year in 2012. Cement and glass also show a marked deceleration in growth. Cement output in November grew 11.2% y-on-y, but that represented a significant fall-off from 17.2% y-on-y expansion for the first 11 months as a whole, and the 17.3% yon-y growth the industry saw in November 2010. Glass also saw a similar deceleration, growing 7.1% y-on-y in November, compared to 17.0% y-on-y from the first 11 months. Cement prices have been declining steadily over the past few months, a trend that Fitch projects will continue into 2012, due to overcapacity. It notes that, because of their high level of investment in building even more capacity, major Chinese cement producers are cash flow negative. Copper presents a more unusual picture. Chinas copper imports in December hit an all-time record high of 508,942 tons, up 47.7% y-on-y. However, there is little reason to believe this was driven by end user demand. Most analysts Ive talked to believe it was primarily due to a resurgence in speculative arbitrage based on the gap between copper prices in Shanghai and London, and possibly renewed interest in using stockpiled copper as collateral for obtaining loans both practices spurred by expectations of monetary easing. In short, the Chinese are buying copper, like homes, to trade not to use. Of course, land is also a key construction input. Ive already written about the dramatic fall-off in local government land sales to developers, here as well as here. Newly released year-end figures show that Beijings overall revenues from land sales in 2011 dropped 35.7% compared to 2010, despite robust sales in the first half of the year. Land sales revenues for residential projects plunged even more steeply, by 55.4%, while the average auction price for residential land dropped 30.5% (from RMB 7,317 per sq. meter to RMB 5,088). In Shanghai, total land sales revenues dropped 20.0% y-on-y, and average the average price of residential land plummeted 41.0%. On January 7, Chinas Minister of Land and Resources stated that nationwide, land sales revenues in 2011 were up slightly over the previous year, but offered no details. A few days earlier, however, the 21st Century Business Herald reported that nationwide land sales may have dropped as much as 20% year-on-year. All in all, it certainly appears that some kind of a slowdown, prompted by a correction in the real estate market, is taking place in China. What does this mean for the Chinese economy? Not much, argues Morgan Stanleys Stephen Roach, in a recent syndicated op-ed: Moreover, it is a serious exaggeration to claim, as many do today, that the Chinese economy is one massive real-estate bubble. Yes, total fixed investment is approaching an unprecedented 50% of GDP, but residential and nonresidential real estate, combined, accounts for only 15-20% of that no more than 10% of the overall economy. In terms of floor space, residential construction accounts for half of Chinas real-estate investment. Identifying the share of residential real estate that goes to private developers in the dozen or so first-tier cities (which account for most of the Chinese property markets fizz) suggests that less than 1% of GDP would be at risk in the event of a housing-market collapse not exactly a recipe for a hard landing. I think Roach is underestimating the problem. First of all, 10% of GDP sounds a bit low to me. Reliable statistics forwarded to me by Bloomberg researchers put residential construction alone at 9.9% of Chinas GDP in 2010 (compared to 6.1% at the U.S. housing peak in 2005, 9.3% at Spains peak in 2007, and 14.0% at Irelands peak in 2006). Roughly consistent with this figure, UBS economist Jonathan Anderson estimates that total real estate

construction (including residential and commercial) accounted for 13% of GDP in 2010. Second, this number does not include
sectors such as steel and cement that are directly and heavily dependent on construction demand. As Ive noted, that raises the stakes to 20-25% of GDP.

Third, Ive argued vigorously for some time now that contrary to what Roach maintains, the overhangs in Chinas property market are not at all limited to first-tier cities, based not only on the data I have seen but on copious news reports and the evidence of my own eyes. Far from being mere fizz, they are the pervasive outgrowth of deeply embedded structural issues in Chinas economy. Having said all that, lets assume for a moment that Roach is right that real estate construction directly accounts for 10% of Chinas GDP. Now lets assume that the growth rate for real estate investment drops from roughly 30% last year to zero in 2012. That sounds catastrophic, but keep in mind, zero growth doesnt mean a cessation of all construction. It means China will build the exactly same number of condos, villas, offices, and shopping malls this year that it did last year an astonishing rate of construction, by any historical standard. If the property sector grew by 30% in 2010, and accounted for 10% of GDP, and GDP grew by 8.5% (roughly), that implies a growth rate for the rest of the economy of 6.1%. If you take real estate expansion down to zero, and assume the rest of the

economy keeps humming along, that knocks overall GDP growth down to 5.5% a hard landing in most peoples book. Again, that may sound extreme, but if we look to the U.S., Spain, or Ireland as an example of what happens when a bubble bursts, the most likely outcome isnt a plateau in construction (zero growth) but a collapse (sharply negative contraction) followed
by years in which hardly anything gets built. Im already being generous here in assuming that China is somehow different. More importantly, were only looking here at the direct impact of a real estate downturn on GDP: the homes and offices that arent built, the steel and other materials that arent ordered. In the lead-up to the U.S. subprime crisis, Ben Stein (who I generally have a high regard for) famously opined that subprime mortgages comprised such a tiny portion of the nations assets that they werent worth worrying about: the total loss may be about of one percent of the mortgages made and probably less, and a lot of it is insured. This is an absolutely trivial number in the context of a $14 trillion economy with net wealth in the realm of $60 trillion. Stein later penned a mea culpa, admitting that where I missed the boat was not realizing how large were the CDS [credit default swaps] based on the junk mortgage bonds. That insurance he was talking about actually turned to be a huge problem, not a solution. It was the indirect effects of the U.S. housing crash the way it triggered reactions throughout the financial system and apparently unrelated parts of the economy that turned it into a real crisis. So in the next post in this series (Part 2B), I will take the next step and explore the far more serious indirecteffects of Chinas real estate downturn on growth. Ill look at how the property market has been the lynchpin of a much broader investment boom that has been driving Chinas rapid economic growth, and examine the concrete evidence that this boom is now starting to unravel.

b. CCP collapse Infrastructure and exports cause Chinese economy to overheat and threatens social stability, sparking a collapse. WSJ 10 Goldilocks and the China Bears: Rising inflation exposes the Achilles' heel of the Chinese growth model. November 17,
2010http://online.wsj.com/article/SB10001424052748703848204575608030288317058.html?mod=googlenews_wsj Rising inflation threatens China's goldilocks economy. That may sound like hyperbole, given that the country's consumer price index remains quiescent by most standards. Last week, the October figures showed prices rising at 4.4% year on year, up from 3.6% in September. As Victor Shih writes nearby, this is particularly painful for China's poor, and so officials need to contain it right away to preserve

social stability. But in a world in which many countries are worried more about recession and deflation than overheating, it may not seem like a big
problem. Can't a bit of monetary tightening do the trick? Perhaps not this time. On monetary matters, China is an unusual case. For the last seven years or so, it has enjoyed a phenomenal economic run. Not only has China's growth since 2003 been fast, it has also been less volatile than in the 1990s or early 2000s and inflation has remained at bay. While there were times when the economy slowed or overheated a bit, it always recovered. Beijing won kudos for its technocratic management. How did the cadres do it? They deferred inflation by buying dollars and then sterilizing the increase in the supply of yuan. The proof is in the monetary policy reports of the central bank. Over the last seven years, the required reserve ratio has risen to a staggering 18% for large banks and 17.5% for other banks, up from 6% in 2003. The People's Bank of China has also been mopping up liquidity in other ways. For instance, as of the end of June, it had 4.4 trillion yuan ($665 billion) in central bank bills outstanding. The U.S. Federal Reserve is under fire for expanding its balance sheet, but the PBoC puts it to shame. By holding down the value of the yuan while also limiting the money supply,

China's central bank has enabled impressive export-dependent growth. And when the world economy stumbled, the government doubled down on investment, encouraging banks to lend freely for infrastructure. Now the bills are coming due. For a start, there's the question of how much more monetary policy ammunition the
PBoC has left to fight inflation. A high savings rate has helped keep the banks liquid. Hot money will continue to come in, especially now that the Fed's QE2 has been announced, and the trade surplus for October was $27 billion. To keep the yuan-dollar exchange rate stable, the central bank has to continue sterilizing those money inflows before it can even start to fight inflation. If it is unable to do so, inflation could accelerate. Then there's the PBoC's own financial health. Raising the reserve ratio has been its preferred method of controlling the money supply, since it doesn't have to pay interest on the funds commercial banks are forced to keep on deposit at the central bank. But on its central bank bills and repos, it is borrowing at short-term rates of about 1.5% to 2%. On the asset side of its balance sheet it is earning less than 1.5% on five-year U.S. Treasurys. If the Fed succeeds in pushing down U.S. borrowing costs further, and inflation in China forces more interest rate increases, the spread on $2 trillion of foreign reserves is going to become costly. Not to mention that the yuan is appreciating against the dollar. Unwinding even a portion of China's huge currency intervention would be painful. As economist John Greenwood of Invesco has written, the Malaysians engaged in a similar monetary strategy until the mid-1990s, when inflation emerged. After the central bank started making losses, it stopped sterilizing. All that deferred inflation came back in a rush. After the bubble burst, the

oversized export side of the economy went into a tailspin, companies couldn't pay back their loans and a painful recession ensued. In the near term, tightening credit could also expose the weaknesses in China's corporations
and put the banks under strain. As long as the lending spree keeps going, companies appear healthy, banks margins are fat and nonperforming loan ratios are low. The PBoC recently raised borrowing rates by 25 basis points, and the markets expect another rise before the end of the year. Lending

quotas, China's main tool for controlling credit growth, could also be cut. For many companies, this could come as a rude shock. For a long time, the question put to China bears has been what would spark a crisis. Capital controls mean that there is
little possibility of capital flight, and the government stands behind the state-run banks so there seems to be no systemic risk. While we wouldn't be so bold as to predict a crash, inflation is one way in which China's goldilocks economy could come to an end and the bears be proven right

U.S. steel good

American steel industry is key to US infrastructure, energy development, and the military Price et al, 10 (Alan H., lawyer at Wiley Rein and head of the firms international trade practice, *and Timothy C. Brightbill, JD, Adjunct Professor of Law at Georgetown University and a partner at Wiley Rein LLP, *and Christopher B. Weld, lawyer at Wiley Rein, *and Tessa V. Capeloto, lawyer at Wiley Rein, October 2010, The Reform Myth: How China is Using State Power to Create the Worlds Dominant Steel Industry, http://www.steel.org/~/media/Files/AISI/General%20Docs/reform%20myth.ashx, DJH) Investments like the Anshan investment also raise national security concerns. The U.S. steel sector plays a critical role in our national defense, and in building and maintaining the nation's critical infrastructure. The Anshan transaction could provide the Chinese government with direct access to, and information concerning, current and future U.S. infrastructure, energy and defense projects that may be critical to national defense. Moreover, as Anshan itself has acknowledged, the investment could provide the Chinese government with potential new technologies in the steel production industry.

a2 Asia War
The South China Sea insulates Asian Conflict Kaplan 11 The South China Sea Is the Future of Conflict The 21st century's defining battleground is going to be on water. BY ROBERT D. KAPLAN
(senior fellow at the Center for a New American Security, Kaplan has been a consultant to the U. S. Armys Special Forces Regiment, the U. S. Air Force, and the U. S. Marines) | SEPT/OCT 2011 http://www.foreignpolicy.com/articles/2011/08/15/the_south_china_sea_is_the_future_of_conflict?page=0,4 Europe is a landscape; East Asia a seascape. Therein lies a crucial difference between the 20th and 21st centuries. The most contested areas of the globe in the last century lay on dry land in Europe, particularly in the flat expanse that rendered the eastern and western borders of Germany artificial and exposed to the inexorable march of armies. But over the span of the decades, the demographic and economic axis of the Earth has shifted measurably to the opposite end of Eurasia, where the spaces between major population centers are overwhelmingly maritime. Because of the way geography illuminates and sets priorities, these physical contours of East Asia augur a naval century -- naval being defined here in the broad sense to include both sea and air battle formations now that they have become increasingly inextricable. Why? China, which, especially now that its land borders are more secure than at any time since the height of the Qing dynasty at the end of the 18th century, is

engaged in an undeniable naval expansion. It is through sea power that China will psychologically erase two centuries of foreign transgressions on its territory -- forcing every country around it to react. Military engagements on land and at sea are vastly different, with major implications for the grand
strategies needed to win -- or avoid -- them. Those on land enmesh civilian populations, in effect making human rights a signal element of war studies. Those at sea approach conflict as a clinical and technocratic affair, in effect reducing war to math, in marked contrast with the intellectual battles that helped define previous conflicts. World War II was a moral struggle against fascism, the ideology responsible for the murder of tens of millions of noncombatants. The Cold War was a moral struggle against communism, an equally oppressive ideology by which the vast territories captured by the Red Army were ruled. The immediate post-Cold War period became a moral struggle against genocide in the Balkans and Central Africa, two places where ground warfare and crimes against humanity could not be separated. More recently, a moral struggle against radical Islam has drawn the United States deep into the mountainous confines of Afghanistan, where the humane treatment of millions of civilians is critical to the war's success. In all these efforts, war and foreign policy have become subjects not only for soldiers and diplomats, but for humanists and intellectuals. Indeed, counterinsurgency represents a culmination of sorts of the union between uniformed officers and human rights experts. This is the upshot of ground war evolving into total war in the modern age. East Asia, or more precisely the Western Pacific, which is quickly becoming the world's new center of

naval activity, presages a fundamentally different dynamic. It will likely produce relatively few moral dilemmas of the kind we
have been used to in the 20th and early 21st centuries, with the remote possibility of land warfare on the Korean Peninsula as the striking exception. The Western Pacific will return military affairs to the narrow realm of defense experts. This is not merely because we are dealing with a naval realm, in which civilians are not present. It is also because of the nature of the states themselves in East Asia, which, like China, may be strongly

authoritarian but in most cases are not tyrannical or deeply inhumane. The struggle for primacy in the Western Pacific will not necessarily involve combat; much of what takes place will happen quietly and over the horizon in blank sea space, at a glacial tempo befitting the slow, steady accommodation to superior economic and military power that states have made throughout history. War is far from inevitable even if competition is a given. And if China and the United States manage the coming handoff successfully, Asia, and the world, will be a more secure, prosperous place. What could be more moral than that? Remember: It is realism in the service of the national interest -- whose goal is the avoidance of war -- that
has saved lives over the span of history far more than humanitarian interventionism. EAST ASIA IS A VAST, YAWNING EXPANSE stretching nearly from the Arctic to Antarctic -- from the Kuril Islands southward to New Zealand -- and characterized by a shattered array of isolated coastlines and far-flung archipelagos. Even accounting for how dramatically technology has compressed distance, the sea itself still acts as a barrier to aggression, at least to a degree that dry land does not. The sea, unlike land, creates clearly defined borders, giving it the potential to

reduce conflict. Then there is speed to consider. Even the fastest warships travel comparatively slowly, 35 knots, say, reducing the chance of
miscalculations and giving diplomats more hours -- days, even -- to reconsider decisions. Navies and air forces simply do not occupy territory the way that armies do. It is because of the seas around East Asia -- the center of global manufacturing as well as rising military purchases -- that the 21st century has a better chance than the 20th of avoiding great military conflagrations. Of course, East Asia saw great military conflagrations in the 20th century, which the seas did not prevent: the Russo-Japanese War; the almost half-century of civil war in China that came with the slow collapse of the Qing dynasty; the various conquests of imperial Japan, followed by World War II in the Pacific; the Korean War; the wars in Cambodia and Laos; and the two in Vietnam involving the French and the Americans. The fact that the geography of East Asia is primarily maritime had little impact on such wars, which at their core were conflicts of national consolidation or liberation. But that age for the most part lies behind us. East Asian militaries, rather than focusing inward with low-tech armies, are focusing outward with high-tech navies and air forces. As for the comparison between China today and Germany on the eve of World War I that many make, it is flawed: Whereas Germany was primarily a land power, owing to the geography of Europe, China will be primarily

a naval power, owing to the geography of East Asia. East Asia can be divided into two general areas: Northeast Asia, dominated by the Korean
Peninsula, and Southeast Asia, dominated by the South China Sea. Northeast Asia pivots on the destiny of North Korea, an isolated, totalitarian state with dim prospects in a world governed by capitalism and electronic communication. Were North Korea to implode, Chinese, U.S., and South Korean ground forces might meet up on the peninsula's northern half in the mother of all humanitarian interventions, even as they carve out spheres of influence for themselves. Naval issues would be secondary. But an eventual reunification of Korea would soon bring naval issues to the fore, with a Greater Korea, China, and Japan in delicate equipoise, separated by the Sea of Japan and the Yellow and Bohai seas. Yet because North Korea still exists, the Cold War phase of Northeast Asian history is not entirely over, and land power may well come to dominate the news there before sea power will. Southeast Asia, by contrast, is already deep into the post-Cold War phase of history. Vietnam, which dominates the western shore of the South China Sea, is a capitalist juggernaut despite its political system, seeking closer military ties to the United States. China, consolidated as a dynastic state by Mao Zedong after decades of chaos and made into the world's most dynamic economy by the liberalizations of Deng Xiaoping, is pressing outward with its navy to what it calls the "first island chain" in the Western Pacific. The Muslim behemoth of Indonesia, having endured and finally ended decades of military rule, is poised to emerge as a second India: a vibrant and stable democracy with the potential to project power by way of its growing economy. Singapore and Malaysia are also surging forward economically, in devotion to the city-state-cum-trading-state model and through varying blends of democracy and authoritarianism. The composite picture is of a cluster of states, which, with problems of domestic legitimacy and state-building behind them, are ready to advance their perceived territorial rights beyond their own shores. This outward collective push is located in the demographic cockpit of the globe, for it is in Southeast Asia, with its 615 million people, where China's 1.3 billion people converge with the Indian subcontinent's 1.5 billion people. And the geographical meeting place of these states, and their militaries, is maritime: the South China Sea. The South China Sea joins the Southeast Asian states with the Western Pacific, functioning as the throat of global sea routes. Here is the center of maritime Eurasia, punctuated by the straits of Malacca, Sunda, Lombok, and Makassar. More than half the world's annual merchant fleet tonnage passes through these choke points, and a third of all maritime traffic. The oil transported through the Strait of Malacca from the Indian Ocean, en route to East Asia through the South China Sea, is more than six times the amount that passes through the Suez Canal and 17 times the

amount that transits the Panama Canal. Roughly two-thirds of South Korea's energy supplies, nearly 60 percent of Japan's and Taiwan's energy supplies, and about 80 percent of China's crude-oil imports come through the South China Sea. What's more, the South China Sea has proven oil reserves of 7 billion barrels and an estimated 900 trillion cubic feet of natural gas, a potentially huge bountyJUST AS GERMAN SOIL constituted the military front line of the Cold War, the waters of the South China Sea may constitute the military front line of the coming decades. As China's navy becomes

stronger and as China's claim on the South China Sea contradicts those of other littoral states, these other states will be forced to further develop their naval capacities. They will also balance against China by relying increasingly on the U.S. Navy, whose strength has probably peaked in relative terms, even as it must divert considerable resources to the Middle East. Worldwide multipolarity is
already a feature of diplomacy and economics, but the South China Sea could show us what multipolarity in a military sense actually looks like. There is nothing romantic about this new front, void as it is of moral struggles. In naval conflicts, unless there is shelling onshore, there are no victims per se; nor is there a philosophical enemy to confront. Nothing on the scale of ethnic cleansing is likely to occur in this new central theater of conflict. China, its suffering dissidents notwithstanding, simply does not measure up as an object of moral fury. The Chinese regime demonstrates only a low-

calorie version of authoritarianism, with a capitalist economy and little governing ideology to speak of. Moreover, China is likely to become more open rather than closed as a society in future years. Instead of fascism or militarism,
China, along with other states in East Asia, is increasingly defined by the persistence of old-fashioned nationalism: an idea, certainly, but not one that since the mid-19th century has been attractive to intellectuals. And even if China does become more democratic, its nationalism is likely only to increase, as even a casual survey of the views of its relatively freewheeling netizens makes clear. We often think of nationalism as a reactionary sentiment, a relic of the 19th century. Yet it is traditional nationalism that mainly drives politics in Asia, and will continue to do so. That nationalism is leading unapologetically to the growth of militaries in the region -- navies and air forces especially -- to defend sovereignty and make claims for disputed natural resources. There is no philosophical allure here. It is all about the cold logic of the balance of power. To the degree that unsentimental realism, which is allied with nationalism, has a geographical home, it is the South China Sea. Whatever moral drama does occur in East Asia will thus take the form of austere power politics of the sort that leaves many intellectuals and journalists numb. As Thucydides put it so memorably in his telling of the ancient Athenians' subjugation of the island of Melos, "The strong do what they can and the weak suffer what they must." In the 21st-century retelling, with China in Athens's role as the preeminent regional sea power, the weak will still submit -- but that's it. This will be China's undeclared strategy, and the smaller countries of Southeast Asia may well bandwagon with the United States to avoid the Melians' fate. But slaughter there will be not. The South China Sea presages a different form of conflict than the ones to which we have become accustomed. Since the beginning of the 20th century, we have been traumatized by massive, conventional land engagements on the one hand, and dirty, irregular small wars on the other. Because both kinds of war produced massive civilian casualties, war has been a subject for humanists as well as generals. But in the future we just might see a purer form of

conflict, limited to the naval realm. This is a positive scenario. Conflict cannot be eliminated from the human condition altogether. A theme in Machiavelli's Discourses on Livy is that conflict, properly controlled, is more likely than rigid
stability to lead to human progress. A sea crowded with warships does not contradict an era of great promise for Asia. Insecurity often breeds dynamism. But can conflict in the South China Sea be properly controlled? My argument thus far presupposes that major warfare will not break out

in the area and that instead countries will be content to jockey for position with their warships on the high seas, while making competing claims for natural resources and perhaps even agreeing to a fair distribution of them. But what if China were, against all evidential trends, to invade Taiwan? What if China and Vietnam, whose
intense rivalry reaches far back into history, go to war as they did in 1979, with more lethal weaponry this time? For it isn't just China that is dramatically building its military; Southeast Asian countries are as well. Their defense budgets have increased by about a third in the past decade, even as European defense budgets have declined. Arms imports to Indonesia, Singapore, and Malaysia have gone up 84 percent, 146 percent, and 722 percent, respectively, since 2000. The spending is on naval and air platforms: surface warships, submarines with advanced missile systems, and long-range fighter jets. Vietnam recently spent $2 billion on six state-of-the-art Kilo-class Russian submarines and $1 billion on Russian fighter jets. Malaysia just opened a submarine base on Borneo. While the United States has been distracted by land wars in the greater Middle East, military power has been quietly shifting from Europe to Asia. The United States presently guarantees the uneasy status quo in the South China Sea, limiting China's aggression mainly to its maps and serving as a check on China's diplomats and navy (though this is not to say that America is pure in its actions and China automatically the villain). What the United States provides to the countries of the South China Sea region is less the fact of its democratic virtue than the fact of its raw muscle. It is the very balance of power between the United States and China that ultimately keeps Vietnam, Taiwan, the Philippines, Indonesia, Singapore, and Malaysia free, able to play one great power off against the other. And within that space of freedom, regionalism can emerge as a power in its own right, in the form of the Association of Southeast Asian Nations (ASEAN). Yet, such freedom cannot be taken for granted. For the tense, ongoing standoff between the United States and China -which extends to a complex array of topics from trade to currency reform to cybersecurity to intelligence surveillance -- threatens eventually to shift in China's favor in East Asia, largely due to China's geographical centrality to the region THE MOST COMPREHENSIVE SUMMATION of the new Asian geopolitical landscape has come not from Washington or Beijing, but from Canberra. In a 74-page article published last year, "Power Shift: Australia's Future Between Washington and Beijing," Hugh White, professor of strategic studies at the Australian National University, describes his country as the quintessential "status quo" power -- one that desperately wants the situation in Asia to remain exactly as it is, with China continuing to grow so that Australia can trade more and more with it, while America remains "the strongest power in Asia," so as to be Australia's "ultimate protector." But as White writes, the problem is that both of these things cannot go on. Asia cannot continue to change economically without changing politically and strategically; a Chinese economic behemoth naturally will not be content with American military primacy in Asia. What does China want? White posits that the Chinese may desire in Asia the kind of new-style empire that the United States engineered in the Western Hemisphere once Washington had secured dominance over the Caribbean Basin (as Beijing hopes it will over the South China Sea). This new-style empire, in White's words, meant America's neighbors were "more or less free to run their own countries," even as Washington insisted that its views be given "full consideration" and take precedence over those of outside powers. The problem with this model is Japan, which would probably not accept Chinese hegemony, however soft. That leaves the Concert of Europe model, in which China, India, Japan, the United States, and perhaps one or two others would sit down at the table of Asian power as equals. But would the United States accept such a modest role, since it has associated Asian prosperity and stability with its own primacy? White suggests that in the face of rising Chinese power, American dominance might henceforth mean instability for Asia. American dominance is predicated on the notion that because China is authoritarian at home, it will act "unacceptably abroad." But that may not be so, White argues. China's conception of itself is that of a benign, non-hegemonic power, one that does not interfere in the domestic philosophies of other states in the way the United States -- with its busybody morality -- does. Because China sees itself as the Middle Kingdom, its basis of dominance is its own inherent centrality to world history, rather than any system it seeks to export. In other words, the United States, not China, might be the problem in the future. We may actually care too much about the internal nature of the Chinese regime and seek to limit China's power abroad because we do not like its domestic policies. Instead, America's aim in Asia should be balance, not dominance. It is precisely because hard power is still the key to international relations that we must make room for a rising China. The United States need not increase its naval power in the Western Pacific, but it cannot afford to substantially decrease it. The loss of a U.S. aircraft carrier strike group in the Western Pacific due to budget cuts or a redeployment to the Middle East could cause intense discussions in the region about American decline and the consequent need to make amends and side deals with Beijing. The optimal situation is a U.S. air and naval presence at more or less the current level, even as the United States does all in its power to forge cordial and predictable ties with

China. That way America can adjust over time to a Chinese blue-water navy. In international affairs, behind all questions of morality lie questions of power. Humanitarian intervention in the Balkans was possible only because the Serbian regime was weak, unlike the Russian regime, which was committing atrocities of a similar scale in Chechnya while the West did nothing. In the Western Pacific in the coming decades, morality may mean giving up some of our most cherished ideals for the sake of stability. How else are we to make room for a quasi-authoritarian China as its military expands? The balance of power itself, even more than the democratic values of the West, is often the best safeguard of freedom. That, too, will be a lesson of the South China Sea in the 21st century -- another one that idealists do not want to hear.

a2 Japan
Japanese econ collapse inevitable Bloomberg 12 - News Site, business and financial market news (Three Reasons Japans Economic Pain Is Getting Worse, 4/25/12, http://www.bloomberg.com/news/2012-04-25/three-reasons-japan-s-economicpain-is-getting-worse.html)//CH Japans economic problems are serious and getting worse. Foremost among them is the crushing burden of government debt. Japans ratio of government debt to gross domestic product, currently about 2.28, is by far the highest in the industrial world, almost double that of even Greece and Italy, and steadily growing. Already, the combined costs of interest on that debt and social security are approximately equal to total government tax revenue. Japans trade balance is about to go negative for the first time since 1980. Land values and Nikkei stock values have fallen to about 30 percent of 1989 levels. Now, educated young Japanese women are emigrating, Japanese companies are shifting production overseas (even to the U.S.), national politics are in gridlock (six prime ministers in the past five years), and last year Japan experienced its first mass street protests in decades. The economic troubles are symptoms of at least three sets of deeper social problems. Regardless of what policies Japan now adopts, its troubles can only increase unless those social problems are solved. While all three of these also beset other industrial societies, certain local attitudes make them more severe in Japan.

___**Aff Answers

UQ Airlines Declining
Airline forecast looks bleak- even lowering oil prices wont help. Fox business, 6/10/12- (IATA Keeps US$3 Billion Net Profit Forecast for Global Airline Industry in 2012 http://www.foxbusiness.com/news/2012/06/10/iata-keeps-us3-billion-net-profit-forecast-for-global-airlineindustry-in-2012/#ixzz1yvMxLwAl). The International Air Transport Association, or IATA, kept its US$3 billion net profit forecast for the global airline industry this year, after earlier cutting the forecast in March from US$3.5 billion. The profits are less than half of the US$7.9 billion made in 2011, and an even sharper fall from the record US$15.8 billion profit for the industry in 2010. The latest forecasts for the global aviation industry comes as top airline executives gather in Beijing for the association's annual general meeting, with still-high oil prices, intensifying competition, and increased government taxation among key issues they will need to tackle. "Fuel prices are now lower than previously anticipated, but that's on the expectation of economic weakness ahead," said Tony Tyler, Director General at IATA, an industry's global trade group which represents about 240 airlines comprising 84% of scheduled international traffic. Brent crude oil fell below US$100 a barrel for the first time since October on June 1 and prices are down more than 20% from their March highs. However, even with softening oil prices, IATA still expects fuel to account for 33% of airline operating costs, the same level as in 2008 when oil prices spiked. "The Euro zone crisis is standing in the way of improved profitability and we continue to face the prospect of a net profit margin of just 0.5%," said Mr. Tyler, a veteran aviation executive who ran Hong Kong-based Cathay Pacific Airways Ltd. before joining IATA in 2011. The aviation body expects carriers in the Asia-Pacific region to contribute the largest portion of net profit, at US$2.0 billion, though the forecast was slightly revised down Monday from the US$2.3 billion set in March, due to the weak cargo performance in the
first quarter as well as slower economic growth in China and India. Meanwhile, carriers in North America are seeing improved prospects for 2012, according to IATA, which is forecasting total net profit of US$1.4 billion, up from US$900 million it earlier forecast, as tight capacity is helping to improve yields, a key measure of profitability. European airlines, which are struggling amid a deteriorating business environment, is forecast by IATA to report a US$1.1 billion loss, widening from an earlier estimate of a US$600 million loss, due to a combination of slower air traffic demand, high and rising tax regimes and inefficiencies in air traffic management. Separately, Mr. Tyler criticized the European Union's emission trading scheme as "a polarizing obstacle that is preventing real progress" on reducing carbon emission. "Sustainability should unite the world with common purpose, not divid

N/U- jobs declining in the air sector. DOT 11- department of transportation federal aviation administration, (August, The Economic Impact of Civil Aviation on the U.S. Economy, http://www.faa.gov/air_traffic/publications/media/FAA_Economic_Impact_Rpt_2011.pdf). Why is employment declining so drastically while output is rising? There are three reasons for this apparent contradiction . The first reason is that many airlines are replacing directly employed workers with workers supplied through contracts with outside firms. According to annual data from BTS, maintenance employment fell 33 percent from 64,248 in 2000 to 42,774 in 2009 (Table 1). The drop in employment stemmed mainly from changes in employment at the network carriers.
Among seven network airlines, employment decreased from 55,715 to 31,448. 24 At these carriers, the average number of maintenance workers per aircraft fell from 16.6 in 2000 to 12.4 in 2009, and the percentage of maintenance expenses outsourced to other firms rose from 24.3 to 38.9. 25 Second, low-

cost carriers (LCC), which employ far fewer maintenance employees per aircraft and outsource a higher percentage of maintenance expenses, grew as a share of the industry during this period. In 2009, the number of LCC workers was 3,300 while the number of maintenance employees
per aircraft and the percent of maintenance expenses outsourced stood at 3.2 employees and 55.6 percent, respectively (Table 1). LCCs maintenance activity is lower because these carriers utilize newer aircraft. According to calculations using the Aircraft Inventory data from BTS, the average age of LCCs aircraft was 9.4 years versus 14.8 years for network carriers in 2009. Also noteworthy is the increase in LCC industry share of domestic

flight operations. According to BTS, the annual number of domestically scheduled flights by network airlines fell from 4.2 to 2.5 million between 2000 and 2009, while the number of flights among LCCs increased from 1.3 to 1.8 million. Furthermore, in response to the recent recession, airlines employed fewer maintenance workers and reduced outsourced maintenance expenses.
Comparison of the 2008 and 2009 data shows a 7.2 percent decline in the employment of maintenance workers, all attributable to a decrease in employment at network airlines (Table 1). The data also show a 1.8 percentage-point decrease in the share of maintenance expenses that were outsourced.

The third reason for the fall in industry employment is the substitution of technology for tasks previously handled by employees. For example, more travelers are using the Internet instead of contacting airline ticket agents to book, price-compare or
check in for flights. Digital technology also has brought about greater efficiencies in handling airline tickets and luggage at airports. 26

UQ Defense Base (Aero)

Defense base competitiveness is eroding now Capozzola 11 AAM Steven, Media Director Alliance for American Manufacturing, What Remains of the U.S. Defense Industrial Base?, American Manufacturing Blog, 4-14, http://www.americanmanufacturing.org/blog/what-remains-usdefense-industrial-base A new report commissioned by the AFL-CIO Industrial Union Council and authored by Dr. Joel Yudken finds that the ongoing erosion of the U.S. manufacturing base has left critical holes in the America's national security. Yudken's report, Manufacturing Insecurity, reports that "there are advanced technologies critical to military systems armor plate steel, defense-specific integrated circuits, night vision gogglesfor which domestic sources are inadequate." Yudken says that significant numbers of items once supplied by U.S. manufacturers are now obtained from foreign suppliers because they are "not readily available from U.S. producers." He cites Col. Michael Cole, of the U.S. Joint Forces Command, who observes: the
problem is not just a matter of a handful of highly specialized items designed to meet narrow defense requirements, but the eradication of U.S. industry capability. He also warns that current strategies to deal with an industrial base that increasingly is unable to supply the military with manufactured parts and electronic components are not working. Manufacturing Insecurity examines how much of U.S.

industrial defense capability has been eroded and looks at the potential weakening of Americas defense industrial base in the coming decades. Air power is declining boosting the industrial base is critical to reverse the trend Hughes 11 Director @ Program on America Kent, Director Program on America and the Global Economy, The Defense Industrial Base at Risk, America and the Global Economy, 1-4-2011, http://americaandtheglobaleconomy.wordpress.com/2011/01/04/thedefense-industrial-base-at-risk/ For decades America has remained at the forefront of both industrial innovation and national defense. These twin pillars of American strength now exist in a challenging climate beset by uncertain economic and political realities.
On December 6th, the Reserve Officers Association and the Woodrow Wilson Centers Program on America and the Global Economy hosted a half day event that included Members of Congress and policy and industry experts to discuss these and other issues as they relate to the state of Americas defense industrial base. The speakers provided a number of unique perspectives and touched on a number of key elements affecting the defense industrial base that ranged from the defense budget and the push to reduce the countrys fiscal deficit to technological developments and the future U.S. international power. Following welcoming remarks by Bob Feidler of the Reserve Officers Association, Lt. Gen. Michael Dunn (Ret.), President of the Air Force Association, provided a war-fighters perspective on the declining defense industrial base. The

bottom line, he began, is yes, the industrial base is in trouble. Emphasizing the preeminent supremacy of American airpower throughout his speech, he noted the antiquated state of the air fleet today, citing a number of planes that are aging. Dunn argued that while the U.S. Air Force has long been Americas asymmetric advantage, the balance is no longer as one sided as it has been in the past as nations like Russia and China continue to build up their respective air fleets. Dunn reiterated the drastic need for greater plane procurement, insisting that the U.S. is not buying enough planes to sustain its military strength. The U.S. leadership is fallingspace development is uniquely important to revive our dominance Gates 6-12 Dominic, Seattle Times aerospace reporter, Boeing's Albaugh worries about 'intellectual disarmament' of U.S., The Seattle Times, http://seattletimes.nwsource.com/html/businesstechnology/2015304417_albaughside13.html
Jim Albaugh is worried about the future of American technological supremacy in the world. "The biggest fear I have is what I call the intellectual disarmament of this country," said the Boeing Commercial Airplanes chief, who is also this year's chairman of the Aerospace Industries Association, the trade group for U.S. defense, space and aviation companies. "We still are the leader in aerospace," he added. "Are we going to be the leader in aerospace in another 20 years?" Albaugh is troubled that the nation's lead in aerospace, the fruit of Cold War military and space-race projects, will be allowed to wither through lack of government funding of new challenges. In a wide-ranging
interview in advance of the global aviation gathering at the Paris Air Show, he ticked off a list of broad national problems that transcend Boeing: Brain drain of talented immigrants: "The best and brightest used to come to the United States and stay," Albaugh said. "Now, the best and brightest come

to the United States, get trained, and leave, and go back and compete against us." Defense cuts: "There is no industrial base policy in
the Department of Defense other than market forces," he said. "Right now, the Boeing Company is the only company in the United States that has a design

team working on a new airplane. There are no [all-new] airplanes being developed for the Department of Defense probably for the

first time in 100 years." Competition from China: "The law of large numbers would dictate that they are going to have more smart people than we are
going to have. And their government has identified aerospace as an industry that they've targeted," Albaugh said. "The question is, can they be innovative and can they handle the complex systems integration?" When Defense Secretary Robert Gates visited China in January, the Chinese military made a very public test flight of its previously secret J-20 Stealth fighter. "A lot of people saw that as a military threat," Albaugh said. "I didn't. I saw it more as an economic threat. They will sell that airplane around the world and will take away a lot of the market that's been enjoyed by U.S. defense contractors." NASA cuts and private space ventures: "They are trying to commercialize space. ... Getting the reliability requires a

lot of redundancy, which requires a lot of cost," Albaugh said. "I think it's going to be a money pit for a lot of them." He lamented the U.S. government's withdrawal from space exploration as the space-shuttle program winds down: "My prediction is that the Chinese will walk on the moon before we launch an American into orbit again in a U.S. spacecraft."

UQ Aero Leadership
The U.S. is losing overall aerospace dominance in orbital launchers and satellites Kaufman 8 Mark, US Finds Its Getting Crowded Out There:Dominance in Space Slips as Other Nations M Step Up Efforts, Washington Post, 7/9, http://www.globalpolicy.org/empire/challenges/competitors/2008/0709space.htm
The study by Futron, which consults for public clients such as NASA and the Defense Department, as well as the private space industry, also reported that

the United States is losing its dominance in orbital launches and satellites built. In 2007, 53 American-built satellites were launched -- about 50 percent of the total. In 1998, 121 new U.S. satellites went into orbit. In two areas, the space prowess of the United States still dominates. Its private space industry earned 75 percent of the worldwide corporate space revenue, and the U.S. military has as many satellites as all other nations combined. But that, too, is changing. Russia has increased its military space spending considerably since the collapse of the Soviet Union. In May, Japan's parliament authorized the use of outer space for defense purposes, signaling increased spending on rockets and spy satellites. And China's military is building a wide range of capabilities in space, a commander of U.S. space forces said last month. Last year, China tested its ground-based anti-satellite technology by destroying an orbiting weather satellite -- a feat that left behind a cloud of dangerous space debris and considerable ill will. Ironically, efforts to deny space technology to potential enemies have hampered American cooperation with other nations and have limited sales of U.S.-made hardware. Concerned about Chinese use
of space technology for military purposes, Congress ramped up restrictions on rocket and satellite sales, and placed them under the cumbersome International Traffic in Arms Regulations (ITAR). In addition, sales of potentially "dual use" technology have to be approved the State Department rather than the Commerce Department. The result has been a surge of rocket and satellite production abroad and the creation of foreign-made satellites that use only homegrown components to avoid complex U.S. restrictions under ITAR and the Iran Nonproliferation Act. That law, passed in 2000, tightened a ban on direct or indirect sales of advanced technology to Iran (especially by Russia). As a result, a

number of foreign governments are buying European satellites and paying the Chinese, Indian and other space programs to launch them. "Some of these companies moved ahead in some areas where, I'm sorry to say, we are no longer the world leaders," Griffin said. Joan JohnsonFreese, a space and national security expert at the Naval War College in Rhode Island, said the United States has been so determined to maintain military space dominance that it is losing ground in commercial space uses and space exploration. "We're giving up our civilian space leadership, which many of us think will have huge strategic implications," she said. "Other nations are falling over each other to work together in space; they
want to share the costs and the risks," she added. "Because of the dual-use issue, we really don't want to globalize."

US will fall behindtransition to renewables is inevitable but Asia will take the lead if the US doesnt Morgan and Ronquillo-Ballesteros, 11 *director of the World Resource Institutes Climate and Energy program **project manager of WRIs International Financial Flows and Environment Project (Jennifer, Athena, Will the Shift to Clean Energy Lead to The Next Generation of Asian Tigers?, 6/20/11, Jakarta Globe, http://www.thejakartaglobe.com/opinion/will-the-shift-to-clean-energy-lead-to-the-nextgeneration-of-asian-tigers/447824) The West created the automobile, led the space race, and invented the Internet. Each of these innovations transformed society, powering rapid economic growth and enabling people to reach new frontiers in ways that had never been imagined before. Now, however, it is Asia that is poised to lead the next revolution: the clean energy revolution. A few weeks ago, the Intergovernmental Panel on Climate Change created by the United Nations released a report showing that the world can shift to 80 percent renewable energy by mid-century. Much of this potential rests in Asia which has been rapidly advancing its renewable energy production and is becoming the top destination for clean energy investment.
The financial firm Ernst & Young recently named China as the No. 1 country for clean energy investment, with India third, and the United States sandwiched in at second. A recent report from the Pew Climate Charitable Trust found that in 2010 clean energy finance and investment grew globally to $243 billion. Of that, Asia was the fastest-growing region, as investment in clean energy climbed to $82.8 billion, a 33 percent increase from 2009. In China, clean energy investment reached $54.4 billion in solar, wind and other clean energy technologies. By comparison the United States saw $34 billion in investments. Why

have Asian countries surged forward in the transition to clean energy investment and production? The first reason is economic growth. Many Asian countries are looking for new ways to power their economies while meeting their development goals, and they understand that investing in innovation can make

them leaders in the global clean energy market. For example, China is already the worlds largest producer of wind turbines and solar
modules. The Philippines declared a goal of becoming the worlds top geothermal electricity producer by 2030. Meanwhile, in India, the company Suzlon was launched in 1995 and is now is the third-largest wind turbine manufacturer in the world. The

second reason is energy security. Many Asian countries depend heavily on fossil fuels, especially gas and oil, meaning that their security is tied to international markets and foreign countries. China, India, Japan and South Korea are all among the worlds leading oil importers (along with the United States and Germany). But none of the Asian countries are top oil exporters. Several countries in Asia, especially China, are also heavily dependent on coal, a limited resource that carries
additional concerns, especially around greenhouse gas emissions. In addition, the recent disaster in Japan reminded the world of the low-probability, but

many countries are now turning to renewable energy sources, like wind, solar and geothermal , which can be produced at home, carry lower risks, and have a virtually limitless supply. The shift to renewable energy has a third driver: climate change. Nearly all Asian countries have experienced recent impacts of extreme weather events, whether its deadly typhoons in the Philippines, drought in China, or flooding in Pakistan. These are the type of events that are expected to increase in frequency and intensity if climate change continues unchecked. Unfortunately, the International Energy Agency announced that global carbon dioxide emissions the leading cause of climate change reached a record high in 2010. In order to slow climate change, the world needs to significantly increase its production of renewable energy. While Asias leadership on clean energy is commendable, it is still not on pace to keep up with the population
high-impact risks of nuclear power. As a result, growth and demand for more energy. Asian countries need to consider how to increase their renewable energy production while meeting the energy needs of their people. According to the International Energy Agency, nearly 800 million people in Asia lacked access to electricity in 2009. This inequality prevents many people from having access to basic energy services, including modern appliances for cooking, computers or even lights for reading. What

will it take for Asia to truly transform its energy production from fossil fuels to renewable energy? And, can it do that in a way that is affordable, sustainable and safe? ; Top minds in business, policy and NGOs are gathering this week in Manila for the Asia
Clean Energy Forum, hosted by the Asian Development Bank, US Agency for International Development, and the World Resources Institute, where leaders will explore what is needed to build a clean-energy economy. One thing is clear: in

order to drive investment, governments need to put the right policies in place. The WRI recently convened a workshop with representatives from 12 developing countries, and the consensus is that the right policies are the key to making renewable energy more competitive. This weeks energy forum will inform an ongoing dialogue among government officials, business leaders, investors, and policy makers that will help shape the direction of Asias energy future. With the right investments and policy decisions, Asias tigers will lead the clean energy race.

UQ Air Power
Air power decline is inevitable Obamas military plan Eaglen, 12 (Mackenzie, resident fellow at the American Enterprise Institute, March 21, 2012, The Air Forces March Madness, Fox News, http://www.foxnews.com/opinion/2012/03/21/air-forces-march-madness/, DJH) Todays Air Force faces serious challenges: a rapidly shrinking size of its inventory and the slow loss of its cutting-edge capabilities. As the Obama administration looks increasingly to the Pacific, it is failing to ensure that it will have enough resources for its new strategy . At a time when the U.S. military desperately needs nextgeneration technologies to meet the challenges posed by proliferating precision munitions and anti-access and denial capabilities, the administration has repeatedly chosen to delay, reduce, or even kill most of the militarys high-tech modernization programs. Since the end of WWII, the United States has maintained its superpower status through a willingness to support a superior military able to prevail in all battles. While technology can serve as a force multiplier that allows smaller forces to punch above their weight, the American experience at war throughout the past century has shown that numbers also matter. The smallest and oldest Air Force in U.S. history needs to get bigger and newer, quickly. Without an Air Force capable of responding to multiple crises around the worldand almost every major conflict in history has played out on more than one frontthe Obama administrations new strategy is a recipe for decline. If the Air Force continues to age and shrink at this rate, the next commander-in-chief will not have the luxury of asking Americas airmen to sustain a humanitarian disaster relief mission while conducting a no-fly zone operation, send the president to South America, and support a troop surge in combat -- all at the same time.

No Link General
No trade off- states fill in the gap and spending is multijurisdictional Slack et al 9 Professor Emeritus in the Department of Geography at Concordia University (Dr. Brian, 2009, Second edition of the textbook The Geography of Transport Systems, Chapter 3, Hofstra University, http://people.hofstra.edu/geotrans/eng/ch3en/conc3en/ch3c1en.html) Although intermodal transportation has opened many opportunities for complementarity between modes, there is intense competition as companies are now competing over many modes in the transport chain. A growing paradigm thus appears to be supply chain
competition with the modal competition component occurring over three dimensions: Modal usage. Competition that involves the comparative advantage of using a specific or a combination of modes. Distance remains one of the basic determinants of modal usage for passengers transportation. However, for a

similar distance, costs, speed and comfort can be significant factors behind the choice of a mode. Infrastructure
usage. Competition resulting from the presence of freight and passenger traffic on the same itineraries linking the same nodes. Market area. Competition being experienced between transport terminals for using new space (terminal relocation or expansion) or capturing new markets (hinterland). It is generally advocated that a form of modal equality (or modal neutrality) should be part of public policy where each mode would compete based upon its inherent characteristics. Since different transport modes are under different jurisdiction and funding mechanisms, modal

equality is conceptually impossible as some modes will always be more advantageous than others. Modal competition is influenced by public policy where one mode could be advantaged over the others. This particularly takes place over government funding of infrastructure and regulation issues. For instance, in the United States the Federal Government would finance 80% of the costs of an highway project, leaving the state government to supply the remaining 20%. For public transit, this share is 50%, while for passenger rail the Federal Government will not provide any funding.
Under such circumstances, public policy shapes modal preferences.

No Link HSR
HSR doesnt compete with auto or air Rosenthal 11 - contributing editor for National Geographic Traveler (John, AMERICA NEEDS HIGH-SPEED RAIL STARVING RAIL INVESTMENT IS A HUGE MISTAKE, proquest)//RK Bipartisan enthusiasm greeted President Barack Obama's announcement in 2009 that the United States, long the world's caboose in train travel, would finally invest in high-speed intercity passenger rail. Much as Dwight D. Eisenhower made the
Interstate Highway System a hallmark of his administration, Mr. Obama pledged to make a national network of bullet trains the legacy of his. Governors from both parties applied for the initial round of $8 billion in funds from the $787 billion stimulus bill. Because of its ingenious scope,

neither the airlines nor the auto industry contested the plan. It targeted corridors among major cities that are too far apart to drive, but too close to make flying worth the time and hassle of trudging through airport security: Chicago, Detroit, St. Louis and Milwaukee, for example, or Atlanta, Charlotte, Birmingham and New Orleans. Although trains wouldn't compete with planes between New York and Los Angeles or, for that matter, Chicago, the plan would put highspeed rail within the reach of 80 percent of Americans. High speed rails inevitable and theres no trade-off Well quote the top U.S. transportation official Travel Weekly, 10 (Michael Fabey staff writer, citing Ray LaHood, Secretary of Transportation, March 15, 2010, LaHood tells aviation industry: don't fight high-speed rail funds, Travel Weekly, http://www.travelweekly.com/Travel-News/Government/LaHood-tells-aviation-industry--Don%E2%80%99tfight-high-speed-rail-funds/ DJH) Transportation Secretary Ray LaHood last week delivered a stern rebuke to aviation industry experts and executives who criticized the Obama administration's interest and investments in high-speed rail. "Let me give you a little political advice: Do not be against highspeed rail," LaHood told the audience attending the annual FAA Forecast Conference here. "The administration wants it. Americans want it. It is coming. We are going to be in the high-speed rail business." The U.S. will develop high-speed rail the same way the country developed a national interstate highway network, LaHood said, adding that it's not necessarily bad news for aviation. "People are still going to fly," he said. "But we need alternatives. People want high-speed rail, so get
with the program."

High speed rail has no impact on flights China proves China Daily, 11 (Xin Dingding staff writer, July 7, 2011, Airlines to fend off fast-train threat, China Daily, http://www.chinadaily.com.cn/china/2011-07/07/content_12850384.htm, DJH) While the long-term relationship between airlines and rail operators is not yet known, the industry website www.carnoc.com carried statistics from the first few days of the high-speed line on Wednesday and said it seemed to have had little impact on BeijingShanghai flights. Planes between Beijing and Shanghai, it said, had an occupancy rate above 85 percent during the
first three days of July.

The modal shift takes place between rail and auto industry, not rail and aviation International Transport Forum 9 intergovernmental organisation with 54 member countries. It acts as a strategic think tank for transport policy and organises an annual summit of ministers. (October 2009, Competitive Interaction Between Airports, Airlines, and High-Speed Rail, Organisation for Economic Cooperation and Development, http://www.internationaltransportforum.org/jtrc/discussionpapers/DP200907.pdf) The French situation was mentioned as one where capacity in aviation was a crucial factor in the assessment of highspeed rail projects. Some French TGV connections brought about a substantial shift from air to rail29,
freeing up scarce capacity (valuable slots) in aviation30. This effect occurs irrespective of whether lowcost or other carriers might provide service between the cities linked by the highspeed rail connection. Furthermore, since highspeed rail uses separate facilities, it can also free up

capacity for rail freight and for regional passenger transport. It was noted, however, that in many cases the main (expected) modal shift in response to a highspeed rail connection is from road to rail, not from air to rail.

Link Turn k2 Competition

Turn competition forces cooperation which is net better than the status quo China proves China Daily, 11 (Xin Dingding staff writer, July 7, 2011, Airlines to fend off fast-train threat, China Daily, http://www.chinadaily.com.cn/china/2011-07/07/content_12850384.htm, DJH) Under pressure from the 300 km/h Beijing-Shanghai rail service that started on June 30, the air transport industry has announced several initiatives to improve punctuality and strengthen cooperation with high-speed rail operators. A publicity official from the North China regional area of the Civil Aviation Administration of China (CAAC), who spoke on condition of
anonymity, said on Wednesday that two meetings were held recently in an attempt to find ways to prevent the profitable Beijing-Shanghai air route from being sidelined by the new fast-train connection between the cities. "There

are not only measures to sharpen flights' competitiveness but there will also be cooperation, such as the fact that airlines will put passengers on fast trains if flights are seriously delayed or canceled," he said. "It will be a win-win situation and bring travelers convenience because they would otherwise have to waste a night and airlines would have to pay for a hotel." A measure to improve flight punctuality is
the fact that airlines operating the Beijing-Shanghai route will now park a spare plane in each of the two airports for use in emergencies. Airlines will also assign guides at airports to help passengers arriving late get on board in a short period of time, according to Beijing News on Wednesday. Air traffic control departments are also being urged to give priority to Beijing-Shanghai flights when circumstances, such as thunderstorms or military drills, affect scheduling, the paper reported. Wang Zhiping, a Shanghai-based engineer, said it was unclear to what extent the steps will improve the viability of flights between the two cities. "Recent

storms caused frequent flight delays, making the high-speed rail seem like really a good choice," he said. "Competition is a good thing because it is the only reason that the airlines have now decided to do something.

Link Turn HSR k2 Econ

Airline industry is failing now Turn high speed rail boosts the aviation industry its complementary Travel Weekly, 10 (Michael Fabey staff writer, citing Ray LaHood, Secretary of Transportation, citing James Crites, executive vice president of operations for Dallas/Fort Worth Airport, March 15, 2010, LaHood tells aviation industry: don't fight high-speed rail funds, Travel Weekly, http://www.travelweekly.com/TravelNews/Government/LaHood-tells-aviation-industry--Don%E2%80%99t-fight-high-speed-rail-funds/ DJH)
For example, he said, it will cost American "hundreds of millions of dollars" to properly equip its aircraft to meet FAA requirements for using the NextGen air traffic control system, which relies on GPS technology. And the government should pay for that, he said. "That would be my starting position."

LaHood said the administration knows the airlines have been suffering a great deal recently. "We have the attention of the White House for the airline industry," LaHood said. But industry officials said the $1.4 billion being requested by the Obama administration for
NextGen is on the low side; the total bill for the program is much closer to what the administration wants to spend on high-speed rail. Aviation officials also claimed their industry has borne the costs of the national campaign against terrorism more than other business segments. The added security measures, they said, have added expense to air transportation, making it a more costly and less desirable mode of travel. "Why airlines are singled out to bear the fight against terrorism escapes me," Arpey said. "I would argue that airlines should not pay for national defense." But James Crites, executive vice president of operations for Dallas/Fort Worth Airport, said the industry segments had only themselves to blame for the administration's relatively lukewarm budget embrace of air traffic control improvements. "We have

And high-speed rail, Crites added, could actually boost aviation by improving overall transportation in the U.S. "I don't see it as competition," he said. "I see it as a complementary mode." That was one of the thrusts of a Brookings Institution report, "Expect Delays: An Analysis of Air Travel Trends in the United States," released last October. The report said the U.S. should look at starting rail links between major metro centers that are 200 and 500 miles apart, specifically those now served by congested air hubs. "Many of these aviation corridors offer an excellent customer base to quickly create significant ridership and begin making returns on investment as soon as possible," the Brookings report said. "At distances of less than 400 miles, high-speed rail can meet or beat air travel times."
to sell Next Generation," he said during the FAA panel debate. "We have to bring back the value of our product."

Youve got it backwards high speed rail saves the airline industry Kantor, 08 Ph.D., County Bank Professor of Economics at the University of CaliforniaMerced (Shawn, September 2008, The Economic Impact of the California High-Speed Rail in the Sacramento/Central Valley Area, http://cdm15025.contentdm.oclc.org/cdm/singleitem/collection/p266401coll4/id/2793, DJH) As HSR became more widely used by commuters and other passengers, it would lead to less congestion on highways and in airports. Freeway gridlock during peak travel times would be reduced, as would airport waiting times. Not only would travelers benefit if their flights could leave and arrive as scheduled, but the airline industry would reap benefits as well as aircraft operating delays were reduced. Cambridge Systematics calculated the benefits accruing in the Central Valley from reduced automobile delays to be nearly $ 2 billion,
while the reduction in air delays specific to the region would be a relatively modest $ 2.6 million.

Link Turn HSR k2 Jobs

Turn HSR fills in other industry losses US Federal News Service 10 (REP. MILLER ISSUES STATEMENT SUPPORTING MICHIGAN'S BID TO DEVELOP HIGH SPEED RAIL SYSTEM, proquest)//RK "High speed passenger rail will play an important role in developing the United States' 21st century transportation network, and I am pleased that Michigan will be in the running for a share of the Department of Transportation's $8 billion in grants which will be distributed around the country. High speed rail has the potential to usher in a new era of economic growth, allowing people to maximize their time in conducting personal and professional business. "If awarded one of
these grants, we need to make sure that the locomotives, rail cars and tracks are built here in Michigan when planning the constructing of this network. As the home of the domestic auto industry, we have the designers, engineers and labor force necessary to build the components that will make this system work. Unfortunately, many of our workers are looking for work. The high speed rail system will not completely offset

the loss of jobs in the auto industry; however, it will certainly help mitigate the impact the tough times our auto industry has been having on the economy.

Alt Causes
Many alt causes to airline industry collapse China proves Caixin, 11 (Caixin Online, citing Li Hun, vice director of the Civil Aviation Administration of China, December 27, 2011, Airline Industry Growth Expected to Slow, http://english.caixin.com/2011-12-27/100342965.html, DJH) In addition to rivalry from an increased number of domestic high-speed rail links put into operation, business prospects for China's airline industry are dimming on a slackened global air market, rising oil prices and the weak capabilities of air companies to cope with rising challenges, said Li.

Case t/DA Econ k2 Air

Case turns the DA- economy is key to airlines DOT 11- department of transportation federal aviation administration, (August, The Economic Impact of Civil Aviation on the U.S. Economy, http://www.faa.gov/air_traffic/publications/media/FAA_Economic_Impact_Rpt_2011.pdf). Economic recovery in the air transportation industry depends heavily on the economic recovery of the rest of the economy, the willingness and financial ability of individuals and businesses to undertake travel, and the need for air-freight services. As the overall economy improves and as more individuals and businesses are willing and able to travel, more arrangements are made for trips to be completed at a future date. Therefore, economic movements in the air transportation industry generally lag movements in the rest of the economy . The recent growth in the economy is leading to increases in airline operating revenues and RPM, 21 but not industry employment. Airline industry employment is in decline and could continue to fall even as the industry recovers. Airline employment has fallen since reaching a peak in 2000, before the onset of the U.S. recession in 2001 and the ensuing terrorist attacks on September 11. The decrease in airline employment may reflect longrun changes within the industry, as the structure of the industry changes and airlines seek to increase productivity. In recent years industry output and employment began to move independently of one another. Airline industry employment peaked in the fourth quarter of 2000 at over 557,000 employees and fell sharply to about 376,000 employees by the third quarter of 2010 (Figure 7), a decrease of 32.5 percent over 10 years, or approximately 3.9
percent per year. 22 Over the same period, RPM rose 1.4 percent per year, from 710.6 billion to 811.4 billion.

Case turns the DA - Better econ solves air industry Hansman and Tam, 02 Hansman is a Professor of Aeronautics and Astronautics, Head of Division of Humans and Automation, Director of International Center for Air Transportation, Tam has B.S. with Honors, Cornell University; M.U.P., Harvard University; Ph.D., Urban and Regional Planning and S.M. Transportation, Massachusetts Institute of Technology, (R. John and Ryan, IMPACT OF AIR TRANSPORTATION ON REGIONAL ECONOMIC AND SOCIAL CONNECTIVITY IN THE UNITED STATES, 2002, http://dspace.mit.edu/bitstream/handle/1721.1/35884/atio_tamhansman.pdf?.)//CH The demand for air transportation services appears to be inherently related to economic activity. In general, a poorly performing economy will result in less circulation of goods and services and a reduction in personal income. The corresponding effect on air travel would involve some reduced demand for discretionary business and social trips such as vacations or visits to friends. Access to high
quality air transportation is also thought to be a stimulant to economic growth through the Enabling Effect of access to markets, people, ideas, and capital. Since both the Travel Need and Enabling Effect are present in the interaction between the Economy and the Air Transportation System (Fig 1), it is difficult to de-couple these effects in most measures of system performance.

Case t/DA HSR S Highways

HSR solves highway and air congestion, and is the only way to solve for oil and econ Rosenthal 12 - contributing editor for National Geographic Traveler (John, AMERICA NEEDS HIGHSPEED RAIL STARVING RAIL INVESTMENT IS A HUGE MISTAKE, http://www.postgazette.com/stories/opinion/perspectives/america-needs-high-speed-rail-225703/)//RK Investment in rail is a step toward energy independence. Transportation accounts for almost three-quarters of U.S. oil consumption. Shifting millions of passenger trips from cars and airplanes to electric-powered trains each year wouldn't just relieve airport and highway congestion; it would also reduce the amount of oil we need to import from the Middle East. And because trains use a third less energy per passenger mile than cars do, they're far less damaging to the environment. The weak economy only increases the urgency. Interest rates are at historic lows, real estate values remain depressed, private sector spending is stagnant and unemployment is stuck around 9 percent. There could hardly be a better time to borrow billions of dollars to buy up land for train rights-of-way and to create high-paying jobs in engineering, manufacturing and construction. When Florida's Republican governor, Rick Scott, returned $2.4 billion in federal rail funds last year, he also
expunged about 17,000 construction jobs in one of the most depressed areas of his state. The Florida corridor, which could have linked Orlando to Tampa as early as 2014, was projected to retHSurn an operating profit of $10 million in its first year alone. From the Appian Way to the Erie Canal, economic development has always followed transportation. Businesses small and large cluster around train depots, propelling real estate values and generating millions in new property taxes. The United States built its way out of the Depression by investing in massive projects

such as the Empire State Building, the Hoover Dam and the Blue Ridge Parkway. High-speed rail is a timeproven way out of today's economic morass. It is undoubtedly expensive. And rejecting the massive investments required as wasteful
spending would be easy if America's transportation needs were stagnant. But they aren't. The Census Bureau estimates that the population will grow by 100 million over the next 40 years. And most of those people will reside in urban areas where airports and highways are already bursting at the seams.

Compared with the cost of building new airports, widening interstates, relocating highway sound barriers and erecting millions of parking lots, high-speed rail is a bargain. California recently revised the projections for its high-speed rail plan to $98 billion, more than twice the previous estimate. But even at those prices, it's cheaper than the alternative. According to Rod Diridon, executive director of the Mineta Transportation Institute in San Jose, to meet the transportation
needs of California's growing population without rail, the state would have to spend more than $100 billion to build new airports and add six lanes to every highway. By 2050, those highways and airports would be just as congested as they are today. But if California spends the money on high-speed rail, it can simply increase the frequency of service or add more cars per train whenever population catches up to capacity.

Warming DA 2ac
Aircrafts cause warming Nitrogen oxides and water DoT, 10 United States Department of Transportation (Department of Transportation, Transportations Role in Reducing U.S. Greenhouse Gas Emissions, Volume 1: Syntheis Report, April 2010, http://ntl.bts.gov/lib/32000/32700/32779/DOT_Climate_Change_Report_-_April_2010__Volume_1_and_2.pdf) //CH Because their emissions take place in the upper atmosphere, aircraft have unique effects on climate change beyond the direct effect of the greenhouse gases emitted. The two primary complexities are due to the generation of nitrogen oxides (NOx) and water vapor by jet engine combustion. In the upper atmosphere, NOx has two opposing effects: it leads to the production of ozone,but at the same time it increases the rate of destruction of methane (CH4).37 These effects are quite substantial: ozone production is estimated to be almost as significant as CO2 emissions in terms of warming potential from aircraft emissions.38 In addition, the injection of water vapor into the very dry and very cold upper atmosphere may lead to contrail formation, which can have a warming effect by trapping infrared radiation from the ground. It also may lead to increased cirrus cloud formation, which may lead to net warming. Not all of these dynamics are well understood, or well quantified, leading to greater uncertainty when estimating
the impact of air travel on global warming.39

Turn Car/airplane production causes emissions DoT, 10 United States Department of Transportation (Department of Transportation, Transportations Role in Reducing U.S. Greenhouse Gas Emissions, Volume 1: Syntheis Report, April 2010, http://ntl.bts.gov/lib/32000/32700/32779/DOT_Climate_Change_Report_-_April_2010__Volume_1_and_2.pdf) //CH A primary source of transportation greenhouse gases is the combustion of fuel or other energy sources to power vehicles, also known as tailpipe emissions. However, transportation depends on an array of other processes that also produce additional GHG emissions. These include the production and distribution of fuel, the manufacture of vehicles, and the construction and maintenance of transportation infrastructure. These supporting processes known as the fuel, vehicle manufacture, and infrastructure cyclesgenerally are not included in U.S. transportation sector GHG estimates. Many of these processes are included in U.S. industrial sector estimates, and some occur overseas, and are therefore excluded from estimates of U.S. transportation sector GHG emissions. However, these processes are important elements of the transportation life cycle, increasing GHG emissions by up to 50 percent more than operating emissions alone. GHGs from these three supporting processes appear to be of comparable magnitude, with fuel cycle emissions likely having the largest contribution. Fuel cycle processes include the extraction, shipment, refining and distribution of fuel, and GHGs from these activities vary by fuel type.54 Gasoline fuel cycle processes are the most GHG intensive of any conventional transportation fuel, with fuel cycle processes producing GHGs that are roughly 24 to 31 percent beyond the combustion emissions of the fuel itself. Diesel fuel cycle emissions are roughly 15 to 25 percent beyond direct diesel combustion emissions, while jet fuel is 17 to 24 percent beyond combustion emissions.55 Vehicle manufacture cycle emissions include
raw material production, vehicle construction and shipment. GREET and LEM provide estimates of GHGs from these processes for on-road vehicles; additional estimates are provided by Chester (2008). With these estimates expressed relative to combustion emissions, the

manufacture-cycle GHGs represent an additional 14 to 19 percent beyond gasoline combustion emissions; manufacturing of freight trucks is 6 to 17 percent beyond combustion diesel combustion emissions; and aircraft up to 6 percent. As shown in Figure 2.14, the EPA estimates that greenhouse gas emissions for light-duty vehicles are 38 to 50 percent higher than operating emissions alone when fuel cycle and vehicle cycle emissions are also included. For diesel- powered freight trucks, emissions are 21 to 45 percent greater when including fuel cycle and vehicle cycle emissions.

Including infrastructure cycle emissions in estimates would further increase these figures. However, there is limited evidence on vehicle infrastructure cycle emissions, although research in this area has accelerated. The only published estimates incorporating infrastructure cycle emissions, as well as fuel and vehicle cycle emissions, are provided by Chester, as shown in Table 2.2 (for selected transportation modes). These results suggest that all together,

fuel, vehicle and infrastructure cycle emissions increase emissions by one-half beyond operating emissions alone for light-duty vehicles and buses; double the emissions for rail transit; and increase aircraft emissions around a quarter.56 For light-duty vehicles, the contribution of infrastructure construction, operations and maintenance is of
roughly the same magnitude as each of the contributions of vehicle manufacturing and fuel production. For rail-transit modes, the relative contribution of infrastructure varies depending upon various factors, such as the amount of tunneling and the elevated right of way used in the system.57

Turn- cars & airplanes bad emissions DoT, 10 United States Department of Transportation (Department of Transportation, Transportations Role in Reducing U.S. Greenhouse Gas Emissions, Volume 1: Syntheis Report, April 2010,

http://ntl.bts.gov/lib/32000/32700/32779/DOT_Climate_Change_Report_-_April_2010__Volume_1_and_2.pdf) //CH Transportation GHG emissions have been growing steadily in recent decades. From 1990 to 2006 alone,
transportation GHG emissions increased 27 percent, accounting for almost one-half of the increase in total U.S. GHG emissions for the period. In 2006,

emissions from on-road vehicles accounted for 79 percent of transportation GHG emissions. Emissions from light-duty vehicles, which include passenger cars and light duty trucks (e.g., sport utility vehicles, pickup trucks, and minivans) accounted for 59 percent of emissions. Emissions from freight trucks accounted for 19 percent, and emissions from commercial aircraft (domestic and international) for 12 percent. Emissions from all other modes accounted for less than 10 percent of total emissions. Cars emissions are decreasing in the status quo better fuel economy and decreasing VMT DoT, 10 United States Department of Transportation (Department of Transportation, Transportations Role in Reducing U.S. Greenhouse Gas Emissions, Volume 1: Syntheis Report, April 2010, http://ntl.bts.gov/lib/32000/32700/32779/DOT_Climate_Change_Report_-_April_2010__Volume_1_and_2.pdf) //CH Trends in transportation GHGs can generally be seen as a race between fuel economy and VMT [Vehicle-miles traveled]. If VMT growth outpaces improvements in fuel economy, emissions will grow. If fuel economy improvements outpace VMT growth, emissions will decline. Recent trends indicate that light duty vehicle emissions are leveling off as VMT growth slows and fuel economy improves. Growth in passenger vehicle VMT slowed from an annual rate of 2.6 percent from 1990 to 2004 to an average annual rate of 0.6 percent from 2004 to 2007. In 2008, VMT on all streets and roads in the United States decreased for the first time since 1980, likely due to a combination of high fuel prices and a weakening economy. In addition, average new vehicle fuel economy improved from 2005 to 2007 as the market share of passenger cars increased compared to light-duty trucks; also a response to higher fuel prices and a weakening economy. As discussed in Section 2.4, light duty vehicle GHGs are projected to almost plateau
as anticipated VMT growth modestly outpaces new fuel economy and low-carbon fuel standards.

___**Aff

No Link General
No trade off- states fill in the gap and spending is multijurisdictional Slack et al 9 Professor Emeritus in the Department of Geography at Concordia University (Dr. Brian, 2009, Second edition of the textbook The Geography of Transport Systems, Chapter 3, Hofstra University, http://people.hofstra.edu/geotrans/eng/ch3en/conc3en/ch3c1en.html) Although intermodal transportation has opened many opportunities for complementarity between modes, there is intense competition as companies are now competing over many modes in the transport chain. A growing paradigm thus appears to be supply chain
competition with the modal competition component occurring over three dimensions: Modal usage. Competition that involves the comparative advantage of using a specific or a combination of modes. Distance remains one of the basic determinants of modal usage for passengers transportation. However, for a

similar distance, costs, speed and comfort can be significant factors behind the choice of a mode. Infrastructure
usage. Competition resulting from the presence of freight and passenger traffic on the same itineraries linking the same nodes. Market area. Competition being experienced between transport terminals for using new space (terminal relocation or expansion) or capturing new markets (hinterland). It is generally advocated that a form of modal equality (or modal neutrality) should be part of public policy where each mode would compete based upon its inherent characteristics. Since different transport modes are under different jurisdiction and funding mechanisms, modal

equality is conceptually impossible as some modes will always be more advantageous than others. Modal competition is influenced by public policy where one mode could be advantaged over the others. This particularly takes place over government funding of infrastructure and regulation issues. For instance, in the United States the Federal Government would finance 80% of the costs of an highway project, leaving the state government to supply the remaining 20%. For public transit, this share is 50%, while for passenger rail the Federal Government will not provide any funding.
Under such circumstances, public policy shapes modal preferences.

No Link Mass Transit

Transit improvements dont suppress car use Taylor and Fink 3 Professor of Urban Planning at UCLA; Director, Lewis Center for Regional Policy Studies; Director, Institute of Transportation Studies AND Ph.D. student in the UCLA Department of Urban Planning (Brian; Camille, 22 March 2003, The Factors Influencing Transit Ridership: A Review And Analysis Of The Ridership Literature, UCLA Department of Urban Planning, http://www.uctc.net/papers/681.pdf) Liu (1993) and Kain and Liu (1995, 1996) include measures of auto ownership (using per capita passenger car registrations or percent carless households) in regression models for various metropolitan areas. However, because car ownership, car use, and transit use are interrelated, a change in one variable affects the others, although the magnitude of effect may not be symmetrical in terms of direction. Kitamura (1989) examines the causal relationships between car ownership, car use, and transit use using surveys and trip diaries given to nearly 4,000 people in the Netherlands. He finds that a change in car ownership leads to a change in car use, which in turn, influences transit use. He finds that the reverse relationship, where a changes in transit use lead to changes in car use, is weak. Thus, he concludes that increasing car use may not be suppressed by transit improvements.

Link Turn MT k2 Auto

Turn Mass transit is key to reinvigorating the auto industry Rosenfeld 9 member of the Canadian Socialist Project and the Greater Toronto Workers' Assembly (Herman, The North American Auto Industry in Crisis, http://monthlyreview.org/2009/06/01/the-northamerican-auto-industry-in-crisis)//RK
Alternative Policies and Approaches 1. Socialist Perspectives A socialist approach to the

search for solutions to the auto crisis might properly begin with a set of principles: class solidarity, democracy, independence from employers, alternatives to the logic of competitive markets, the development of democratic and productive capacities, and environmental responsibility and sustainability.20 If we were to apply these principles, what might we demand? First, the private
welfare state needs to be replaced by a set of strengthened, democratically administered, universal public programs. Pensions, health care, dental, vision, and pharmaceuticals cannot be guaranteed through private plans, dependent on corporate profitability and administered by private insurance companies. These should be fundamental rights that strengthen the independence and well-being of working people. For now, governments should at least guarantee already negotiated plans, which, after all, were funded by the deferred wages of the workers in the first place. Second, the banking and finance sector should be nationalized and socialized and run by democratic bodies. Finance needs to become in fact what current bailouts implicitly assume that it isa public utility. It should be used to fund the legitimate social and economic needs of society. Third, auto production and trade must be regulated. Democratic planning bodies need to be created to regulate trade, the entry and location of production facilities, and the movement of capital. Whatever the immediate result of current restructuring efforts, all of the companies cannot produce vehicles at full capacity and continue to sell their products in North America. Fourth, the need to deal with climate change and the general environmental crisis requires that there be fewer personal and commercial vehicles. We need: (1) new, smaller vehicles that use non-fossil fuels; (2) closed-loop production processes; (3) reusable and recyclable materials and an infrastructure to handle the collection and recycling process; and (4) mass transportation and the infrastructure for it; (5) development of alternative sources of fuel and energy; and (6) new forms of living, working, and enjoying recreation time. All of this requires changes in industry and society that go far beyond the logic of private capital accumulation and competition. Fifth, much of the productive capacity currently used to produce cars must be

redirected to produce other goods or services. Government-owned corporations should be created to take over the productive facilities and resourcessuch as tool and die makingleft idle by todays downsizing, to create environmentally friendly goods, such as wind generators, solar technologies, and mass transit. These resources
have been subsidized by the state and communities, so why should we allow them to disappear because they no longer fit into the logic of market profitability? The unemployed and underemployed would have to be mobilized and organized to demand these

changes and ultimately work in this new sector, earning decent union wages. Sixth, communities must be organized to
defend their right to decent jobs and a share of new production facilities. New institutions have to be created to allow working-class communities like Pontiac, Michigan and Windsor, Ontario to investigate and analyze their needs (be it infrastructure, housing, transportation, services, recreation, etc.), and then to access the technical and financial resources to address them. This is one way to avoid the proliferation of deindustrialized urban centers across North America. Seventh, we need a bold alternative vision for transforming the auto industry . Some call for a nationalized auto,

mass transit, and energy corporation, which would take over the auto companies, reintegrate key supplier facilities, dramatically increase investment in mass transit, phase out fossil and nuclear fuels, and move towards renewable forms of energy.21 They point out the enormous
success of nationally planned industries during the Second World War, when GMalthough still privately ownedbecame the largest aerospace manufacturer, under public control in a planned environment. If nationalized industry and planning worked then, why couldnt they work now? Others have called for strong regulation and a series of transformative experiments, arguing that without changing the larger economic and political environment, a nationalized industry would have a hard time operating differently. Whichever approach is taken, transforming the current industry will require major structural reform, challenging the logic of capitalism and capitalist state institutions.22 Eighth, there need to be solidaristic strategies to protect jobs and income. These might include work sharing (using unemployment insurance programs to subsidize incomes) and extension of various negotiated forms of time off, such as vacation, parental leaves, reduction of overtime, and the like.

The auto industry can build mass transit solves the impact Goodman, 08 professor of environmental design at Hampshire College (Robert, citing Stewart Udall, former Secretary of the Interior, November 18, 2008, Have You Driven a Bus or a Train Lately?, The New York Times, http://www.nytimes.com/2008/11/16/opinion/16goodman.html, DJH) But Mr. Udall recognized that the country could not afford the economic consequences of losing all of the automobile industrys jobs and profits. He proposed that the auto companies branch out into exciting new variants of ground transportation to produce minibuses, people movers, urban mass transit and high-speed intercity trains. Instead of expanding the Interstate highway system, he suggested that the road construction industry take on huge new programs to construct mass transit systems. And he called for building more compact, sensitively
planned communities rather than continuing urban sprawl.

Investment in mass transit leads the way for the auto industry Schor 9 covers federal transportation for StreetsBlog; former staff reporter for The Hill and The Guardian; Masters in Journalism (Elana, 26 October 2009, How Bus Transit Can Help the Auto Industry, StreetsBlog, http://dc.streetsblog.org/2009/10/26/how-bus-transit-can-help-the-auto-industry/) But the recession hasn't dampened the economic potential of hybrid bus production, as the Environmental Defense Fund (EDF) laid out today in a new report [PDF] on the industry. In fact, EDF found, transit bus companies share enough

skills and regional foothold with the auto industry -- the map of bus makers pictured above could be mistaken for a map of automakers -- to pave the way for fuel-efficiency advances that would ultimately benefit all vehicles . After noting that 32 percent of American transit buses do not rely on gas or diesel to run, today's report continues: The bus industry serves as an important entry point for advanced vehicle technologies, especially in new vehicles that require refueling infrastructure and other major changes. For instance, since transit agencies have a well-defined base of centrally managed fleets, they are ideal for testing and proving plug-in hybrid and all-electric buses thus leading the way for the passenger car industry.

Link Turn Buses k2 Auto

Bus production stimulates auto industry and allows transition to rail and green tech production Pollin and Baker 9 Co-director and Professor of Economics, Political Economy Research Institute at @ UMass; AND co-founder of the Center for Economic and Policy Research (Robert; Baker, December 2009, Public Investment, Industrial Policy and U.S. Economic Renewal, Political Economy Research Institutes Center for Economic and Policy Research, http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_201-250/WP211.pdf) Thus, as a short-term agenda, the most effective approach to expanding investments in public transportation would be to give immediate focus to markedly improve public bus services throughout the country. This project should be
undertaken in conjunction with the continued strong commitment to also expanding rail services, as initiated with the ARRA. Over time, the most effective mass transit systems are those that integrate bus and rail systems. Thus, public investment over time should target the goal of

building combined rail/bus public transportation systems. But in the short term, it will be important to show tangible progress in
raising support for public transportation. This can be done, first of all, by simply getting more buses available for service and out on the street. This would enable people to rely less heavily on their cars. It would also entail large-scale procurement contracts with the government. These procurement

orders could also create a major sales boost for the U.S. auto companies as well as the firms that have traditionally
manufactured buses in the U.S. It will be useful to sketch out these possibilities for a short-term agenda in a bit of detail. Bus Procurement Proposal As of the most recent 2007 data, about 65,000 buses are operating in the United States. A program to significantly improve public

transportation service would entail increasing the number of buses in operation by, say, 50 percent. That would
mean raising the total number of buses serving U.S. public transportation consumers to about 100,000. It would be reasonable to allow this 50 percent expansion of available bus service to occur over five years. Table 3 presents some of the key data relevant for evaluating the costs and impact of a U.S. bus procurement program of this magnitude. This is not the place to explore the details of what this expansion in service would mean in terms of accessibility of public transportation in communities throughout the U.S. Suffice it to say that something on the order of a 50 percent improvement

in accessibility would represent a major benefit, especially for lower-income families. Millions of lower-income families
would be able to significantly reduce their reliance on auto transportation, saving them up to around $2,000 per year in overall transportation expenses that is, up to a 10 percent reduction in their total household expenditures.24 The program would also be focused on improving the energy efficiency and quality of the operating bus fleet. The average bus in service is designed to operate for about 7.5 years. If the entire existing fleet of 65,000 buses were to be replaced within 7.5 years, that would mean a bit fewer than 9,000 old buses would be replaced per year with new vehicles. In fact, however, the fleet has been aging significantly since the level of orders peaked in 2001 at about 8,100 new buses. In 2007, only about 3,600 new buses were produced in the U.S. An ambitious but reasonable aim of the new program would be to replace the entire fleet within the next five years, while also expanding the total number of buses in operation to 100,000. This would then mean a procurement order of 100,000 buses over the next five years, or

20,000 new bus orders per year for five years. As the top panel of Table 3 shows, as of 2007, the average cost to produce a bus in the United States was $425,000. Thus, the overall cost to build 100,000 new buses would be about $42.5 billion, or $8.5 billion
per year for five years. But only 35,000 of the new purchases would be for expanding beyond the existing supply of busesthat is, about $15 billion total, or $3 billion per year over five years. The remaining $5.5 billion per year in expenditures would represent a somewhat accelerated depreciation expense, most of which would already have been incorporated into the budgets of the government agencies administering the countrys various public transportation systems. How would such an initiative impact the overall situation in the auto and bus production industry, and manufacturing more generally? The Buy

America Act requires that all federally-funded transit investments be built with at least 60 percent of their components produced in the U.S. and that the assembly also be performed within the U.S. As such, any initiative such as this to expand bus production and bus service throughout the United States would necessarily mean most of the production will be done by U.S. workers.25 At present, the major suppliers of buses in the U.S. are the U.S. companies Gillig and North American Bus, and
Canadian companies with major U.S. operations, New Flyer and Orion. Given that these existing companies produced only about 3,600 buses in 2007, it would be unrealistic to assume they could expand up to 20,000 buses per year in a brief period of time. As a rough estimate, we assume that the existing producers could at most increase their rate of production by 50 percent above their 2007 level, to 5,400 buses per year. For simplicity, we assume the existing bus manufacturers would increase their production to 5,000 buses per year, i.e. 25 percent of the overall procurement order of 20,000. The

remaining roughly 15,000 new buses per year would then be built by the automobile manufacturers in the U.S. To begin with, we include here all 13 companies manufacturing cars in the U.S. as potentially eligible to undertake this project of converting part of their auto production operations into building buses. Of these firms, the U.S. firms
General Motors, Ford, and Chrysler accounted for 60 percent of all cars built in the U.S. as of 2007. The remaining manufacturers producing in the U.S are Japanese, German, and South Korean firms. With auto companies in general facing a severe slumpwith a high percentage

of both their productive equipment and labor force sitting idle or underutilizedwe would anticipate that at least some of the companies would eagerly compete to obtain a major government procurement order, even if fulfilling the order means converting some of their production facilities from autos to buses. What would be the impact for the
car companies of receiving a procurement order to produce 15,000 buses per year for the next five years? To estimate this, we have to compare the production costs of the average bus, at $425,000, with those to produce the average automobile, which are about $13,000 (as shown in the middle panel of Table 3). This means that producing one bus would have an impact on domestic manufacturing equal to producing

about 33 new autos. For simplicity, we round this cost difference at 30-to-one. Based on this roughly 30-to-1 cost differential between buses and autos, for auto manufacturers to receive a procurement order of 15,000 buses per year would be the equivalent of 450,000 new auto-mobile production orders. Total U.S. auto production in 2008 was 10.8 million in 2007 but fell to 8.7 million in 2008. Therefore, an order of 450,000 new cars would be the equivalent of an increase in car orders of about five percent relative to the 2008 level. It would mean that the equivalent of about 9.2 million cars would be produced, which would still be 1.6 million fewer than in 2007. This level of orders would clearly provide a major boost to

U.S. manufacturers. For example, it would have a far greater positive effect over time than the Cash for Clunkers program, which enabled people
to trade in older, low-efficiency cars for new cars and receive a $4,500 rebate for their new car purchase. Amid great fanfare, the program generated a shortterm car sales surge a when it was in effect over July-August 2009, at a cost of $3 billion to the federal governmentan amount equal to the cost net of replacement of our proposed bus procurement program. But at the time of writing, industry analysts expect that sales will subsequently dip down over the course of the full year, with no net gain in overall sales.26 Over the longer term, expanding bus service as the first stage of a broader

public transportation agenda, including expanding rail service as well, will have a far greater positive impact both on the environment and lowering overall living costs for low-income households. In short, depending on details, the program could provide a major increase in sales for the car companies as well as the existing bus manufacturers. It could also encourage the auto companies to focus on the idea of converting a segment of their overall operations to manufacturing products other than automobiles. Moreover, once they have obtained experience in converting part of their production line to buses, they should then be better equipped to undertake additional conversion projectsfor example, into rail production or even clean energy generating equipment, such as wind turbines and various sorts of solar energy systems. Manufacturing 20,000 new buses per year would also generate a total of about 80,000 jobs,
including nearly 30,000 in manufacturing, as we show in the lower panel of Table 3. Of course, spending $8.5 billion per year on anything will produce thousands of jobs. Moreover, as Table 3 shows, the overall impact on employment of manufacturing buses would not be significantly different than putting the same amount of money into producing tanks or missile components for the U.S. military. But the overall economic impact would obviously be dramatically differentfor the environment, for low-income households, as well as for reviving our manufacturing base through conversion to clean-energy investments. The point therefore is that, all of these additional benefits will accrue without experiencing any loss in employment opportunities throughout the economy.

No Impact Resilience
No impact- automobile industry will adapt- empirics prove Freeman 5 science and technology writer, Executive Intelligence Review; Associate Editor, 21st Century Scicne & Technology (Marsha, 9 December 2005, The U.S. Auto Industry Never Just Produced Cars, Executive Intelligence Review, http://www.larouchepub.com/eiw/public/2005/2005_40-49/2005_40-49/200549/pdf/21-22_47_eco.pdf) There is widespread misconception that the automobile industry in the United States is now in the throes of collapse
because there is too much manufacturing capacity for the number of cars people can buy, and that there is nothing else that can be done with the auto industrys factories and machine-tool shops. Nothing could be further from the auto industrys own history. Today, when dozens of manufacturing plants are being shuttered, and tens of thousands of skilled auto and machine-tool workers are losing their jobs, this manufacturing capacity, which

is a national economic asset, must be converted to produce the rail, advanced mass transit, energy, and other infrastructure systems that Lyndon LaRouche has proposed. It has been done in the past. It must be done now. Henry Ford, who created
the system of mass production that made automobiles available and affordable for a large part of the nations population, was born on a farm in Michigan, two years before the end of the Civil War. Henry Ford hated labor-intensive farming. So the first experimental wheeled, motorized vehicle he developed in 1907, two years before his famous Model T car, was the tractor, or automotive plow. Ford began mass producing tractors during the First World War, and the economy remained a major producer to tractors through the early 1960s. In the 1930s, General

Motors, established its Electromotive Division, producing diesel-powered locomotives and trains, contributing to the expansion of the nations rail system. Later, the engines would be used in submarines and destroyers . Present Franklin Roosevelts mobilization , to make the United States the arsenal of democracy during the Second World War, challenged the automobile industry to transform itself into a major supplier of high-technology war material. The last automobiles rolled off the assembly lines in 1942, as the industry joined the full-scale war-production drive. Walter Reuther, president of the United Auto Workers union, and an expert tool-and-die maker, convinced the Roosevelt Administration that the auto industry should be retooled, pointing out that converting a plant to produce airplanes would take six months, while building a new plant would take 18. Over the course of three
years of war production, the auto industry build 27,000 complete planes, 455,522 airplane engines, 255,518 propellers, plus steel helmets, small-arms ammunition, and other items. The challenge to the auto and machine-tool industries and their skilled workers, was that all of these had

to be built to much higher tolerances and greater reliability than automobiles, which, despite the skeptics, the industry magnificently accomplished.

Autos Bad Health

Highways trade off with other transportation causes health costs worth several hundred billion dollars APHA 10 American Public Health Association, publisher of the peer-reviewed American Journal of Public Health and the award-winning
newspaper The Nations Health (American Public Health Association, Hidden Health Costs of Transportation, May 19, 2010, www.apha.org/NR/rdonlyres/E71B4070-9B9D-4EE1-8F43-349D21414962/0/FINALHiddenHealthCostsShortNewBackCover.pdf)//CH The combustion engine and the creation of the highway system increased mobility and access to goods and services. However,

investments in highways have come at the expense of other transportation modes. Over the years this has led to a heavier reliance on vehicles and roadways and less on walking, bicycling and transit use. Further, suburban development has resulted in communities that are away from town centers and public transit and require a near-total reliance on the automobile for transport and access. Our dependence on automobiles and roadways has profound negative impacts on human health: decreased opportunities for physical activity, and increased exposure to air pollution, and the number of traffic crashes. The health costs associated with these impacts, including costs associated with loss of work days and wages, pain and suffering, and premature death, may be as high as several hundred billion dollars. An investment in a healthier transportation system is critical. Providing convenient alternatives,
encouraging active modes of transport, and a establishing a transportation system that fosters connectivity and social interaction can not only offset health impacts and costs, but generate health benefits. Health impacts and costs have typically not been considered in the

transportation policy, planning, and funding decision-making process. There are few standards or models for
estimating health costs. However, existing research can be used to estimate the population at risk, the magnitude of the health impact, and the health costs associated with those impacts. Growing recognition of the connection between transportation, land development and health has resulted in some studies and examples where health impacts and costs have been considered and assessed. These examples not only demonstrate that health costs should be a significant factor in decision-making, but also show that calculating such costs is indeed possible.

Cars hurt public health decrease activity level of the population Frank and Engelke, 10 - City and Regional Planning Program, College of Architecture, Georgia Institute of Technology. (Lawrence D. Frank.
PhD and Peter Engelke, How Land Use and Transportation Systems Impact Public Health: A Literature Review of the Relationship Between Physical Activity and Built Form, May 10, 2010, http://www.cdc.gov/nccdphp/dnpa/pdf/aces-workingpaper1.pdf)//CH This review discusses how urban form affects public health, specifically through the ways in which the built

environment encourages or discourages physical activity levels. The questions raised illuminate fundamental quality of
life considerations including residential preferences, time use, space requirements, security, and convenience, which collectively shape the built environment. The relative costs and benefits of the locational and travel choices that are currently available

have resulted in a[n] built environment designed to accommodate the car -- at the measurable expense of the ability to move about under human power. Although the institutional and attitudinal changes that need to take place to
enable, let alone promote, physical activity in our towns and cities today appear to be daunting, we can take some comfort from Benjamin Franklin, who stated in 1791: To get the bad customs of a country changed and the new ones, though better introduced, it is necessary first to remove the prejudices of the people, enlighten their ignorance, and convince them that their interests will be promoted by the proposed changes; and this is not the work of a day. This report is organized around an urban form - public health model, as conveyed in Figure X-1. Land development and transportation

investments are interactive processes that collectively have a tremendous influence in shaping the built environment. The location of transportation investments impact where growth occurs, and the mode in which the investment is made (e.g., highway, transit, sidewalks, and bikeways) impacts the form of the growth that follows. Conversely, the location of new development impacts the location of transportation investments, while the character of that development (transit- and pedestrian-friendly versus auto-oriented) determines the viability of alternative transportation scenarios. These two urban form processes, land development and transportation investments, are hypothesized to influence public health by affecting the relative convenience and viability of pedestrian travel and biking for both recreational and utilitarian (trip) purposes, and thus they influence the levels of physical activity.2
Figure X-1, therefore, shows that the built environment influences activity patterns, which impact health. However, one's culture, age, income, genetics, and even health influence activity patterns. Consequently, activity patterns serve as a bridge that interfaces the built environment with public health. Our review employs a classification of studies that emphasizes the interfaces between 1. physical activity and health; 2. transportation systems and physical activity; and 3. land development patterns and physical activity.

Autos Bad Racism

Auto use hurts minorities structural discrimination Springs, 7 - B.S. in Sociology from the College of Charleston. (Mary Alice, Inequity in Transport:
The Problem with Auto Hegemony, Chrestomathy, Volume 6, 2007, http://chrestomathy.cofc.edu/documents/vol6/springs.pdf)//CH It is well known that ubiquitous use of the automobile has become a threat to the environment. However, humans have also become

negatively affected by the proliferation of the current auto-centered culture, particularly low-income minority groups. Those who have access to a vehicle have a great advantage in our society while those who do not suffer in many ways. The current style of American transportation planning virtually ignores the needs of those who do not have access to a personal vehicle. Since low-income minority groups are disproportionately represented in this category, traditional transportation planning could be observed as structural discrimination. In recent history, inadequate appropriation of funds towards public transportation in the United States has been
mostly to blame for the lack of safe, efficient travel options of those who do not have access to a car. Medical ailments have been linked to the increased frequency with which low-income minorities live in areas with high vehicular ambient air pollution, even though these individuals are less likely to produce that pollution. As private car hegemony is globalizing, poor minority groups in developing nations are at

risk of experiencing these same phenomena as more and more of their valuable agricultural land is starting to be usurped for the purposes of building road infrastructure for the automobile. Amid all the problems our society is facing, a new paradigm shift towards equitable and sustainable transportation planning is desperately needed.

A2 Semiconductors
Alt causes to semiconductor industry decline Ballhaus et al 9 Ballhaus, German Technology, Media and Telecommunications Leader; Pagella, Director Business Group, Copper Conductors;
Vogel , part of the bioinformatics group at the Institute of Technical Biochemistry at the University of Stuttgart (Werner Ballhaus, Alessandro Pagella and Constantin Vogel, A change of pace for the semiconductor industry?, PricewaterhouseCoopers, November 2009, http://www.pwc.com/en_GX/gx/technology/pdf/change-of-pace-in-the-semiconductor-industry.pdf)//CH However, this growth should not disguise the semiconductor industrys exposure to considerable volatility, with specific and defined cycles that closely

correlate to economic cycles (see Figure 4, which shows the development of worldwide semiconductor sales between 1998 and 2008). In growth years, boosted by strong demand and profits, the semiconductor industry built up significant production capacities, because this was the only way to finance the high costs of setting up new installations. The surplus capacities which existed after the years of economic growth (e.g., in 1995, 2000 and 2007/8) exerted pressure on prices, with corresponding consequences for profitability and growth. Production capacity declined, semiconductors were affected by a shortage of supply, and prices stabilised. This, in turn, resulted in market growth, and the process started anew (e.g., in 1998 and 2002). The correlation between the cyclical nature, production capacities and supply and demand is not the only factor with a major impact on sales. Seasonality also influences supply and demand patterns. For instance, consumer electronic products (mobile telephones,
MP3 players and computers) are mainly purchased in the run-up to Christmas, and demand for chips reflects that seasonality.